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Gateway eyes Packard Bell

Gateway Inc yesterday announced plans to acquire European PC vendor Packard Bell BV, a move funded by Taiwan’s Acer Inc to fight its rival Lenovo in Europe.

US PC maker Gateway yesterday said it offered to buy the parent of Packard Bell BV for an undisclosed amount and the deal is expected to be firmed up by late 2007 or early 2008. It said Acer Inc had agreed to finance the bid. The proposed deal, which comes weeks after Acer announced that it would acquire Gateway for $710 million, would keep Packard Bell out of reach for Lenovo, which has been in talks with Packard Bell for an acquisition bid to boost its European business.

Lenovo faced its first hurdle last month when Gateway said it intended to exercise its right of first refusal to acquire all shares in Packard Bell’s holding company from John Hui, a Hong Kong-born entrepreneur who also holds shares in Gateway. Lenovo’s chief executive Bill Amelio said late last month that it was „still very interested” in the company. „Packard Bell is a great fit It’s not over until it’s over,” he had said in Beijing. But he added Lenovo had „plans in Europe (even) without Packard Bell”.

Acer and Lenovo have been fighting for the third place in the global PC industry, behind market leader Hewlett-Packard and Dell. Lenovo has risen to the No 3 position by taking over IBM’s PC arm for $1.75 billion two years ago. But the sales volume gap between Lenovo and Acer is still narrow, with total shipment in the second quarter reaching 4.8 million and 4.3 million respectively, according to IDC. IDC said if Acer’s deal with Gateway goes through, the Taiwanese PC maker will become the world’s third-largest player replacing Lenovo in terms of shipments.

Although it is still unclear whether Acer would successfully trim its business after acquiring Gateway and Packard Bell, experts said the move would give Acer an edge in the world PC market, where advantage of scale is vital. „The discrepancy among products of different PC vendors are becoming insignificant and large manufacturers have to gobble up smaller ones to establish advantages of scale,” said Simon Ye, analyst from research house Gartner. „Though Acer may face many obstacles in consolidating the new companies, acquisition is the way to go.” (