Lenovo Group Ltd, the world's third-largest PC maker, is trying to acquire Europe's Packard Bell BV to bolster its global expansion.
The Hong Kong-listed company said in a statement that "it has entered into a memorandum of understanding with an independent third party to explore the possibilities of the proposed acquisition".
The company did not reveal details of the possible deal.
If it goes through, the deal would be Lenovo's second overseas foray after its acquisition of IBM's PC division two years ago.
"The deal could give Lenovo a strong foothold in Europe," said Simon Ye, an analyst with Gartner, a leading consultancy on IT and communications. "Lenovo has a good niche in China and the US now, but its presence in Europe has been very weak."
In its first fiscal quarter of this year ending in July, Lenovo's revenue from Europe, Middle East and Africa totaled the US$755 million. This region accounted for 19 percent of the company's total income during the period.
Packard Bell earned 1.5 billion euros in revenue last year and claimed to be the fourth-largest PC maker in Europe. It quadrupled its customers to more than 5 million between 2003 and 2005 and has maintained a sales growth of more than 10 percent for three years.
"Packard Bell has a good distribution channel and client base in Europe, which Lenovo lacks," said Ye. "Moreover, the company has good product research and development capacity, especially in the individual user market."
Lenovo's PCs mainly cater for corporate clients in Europe. But the consumer PC market has enjoyed a much higher growth in recent years as incomes rise.
The deal would help Lenovo overtake Fujitsu Siemens Computers Holding BV as the fourth-largest vendor in Western Europe, according to estimates by research firm IDC.
"It would be much easier for Lenovo to integrate the two companies' business this time," said Ye. "The company has had enough relevant experience from its acquisition of IBM's PC arm."
(China Daily August 9, 2007)