The European Union gave its official blessing to the union of Acer and Packard Bell on Wednesday.
After reviewing the $48.5 million acquisition of Packard Bell by Taiwan-based Acer, the European Commission (the executive branch of the EU) ruled that the two companies as a combined entity would pose no threat to fair competition in the European PC market.
"The Commission's examination showed that the proposed merger would entail horizontal overlaps for desktops and laptops, both for professionals and consumers, at the EEA (European Economic Area) and national levels," the ruling read. "However, the market would remain competitive post-merger in all segments of the PC sector with established alternative suppliers such as Hewlett-Packard, Dell, Fujitsu-Siemens, Toshiba, Sony, and Lenovo."
With that settled, Acer now finally has what it was looking for--a legitimate foothold in the European PC market. The Taiwanese PC maker's decision to bid for Packard Bell last fall was twofold: to instantly find currency with European PC buyers using Packard Bell's established branding, as well as block rival Lenovo's similar ambitions in Europe.
With Packard Bell and Gateway under its umbrella, Acer is now the third-largest supplier of PCs in the world, according to data collected by IDC.
Through a rather circuitous route, Acer finally brought home the prize it had long been eyeing: European PC vendor Packard Bell.
The Taiwan-based computer maker officially purchased 75 percent of Packard Bell parent company PB Holdings for $48.5 million, according to a statement made to the Taiwanese Stock Exchange Thursday, PC World is reporting.
Acer has been the fastest growing PC company in the world over the last year, rising through the ranks to become the No. 3 PC vendor at the end of 2007, with 8.9 percent of the overall market, according to research firm Gartner.
It's also set about making its presence known, scooping up U.S. PC maker Gateway in August for $710 million, and declaring its intentions to snatch Packard Bell even when rival Lenovo also publicly expressed interest. Buying Gateway was key for Acer to get the much-smaller Packard Bell, since Gateway possessed the right of first refusal, or right to make any counter offer if another company tried to buy it.
Why Acer wanted the small PC maker with a negligible market presence outside Europe so badly seemed puzzling to some initially. Now the move is seen as a smart defensive strategy to block any attempts by rival Lenovo from increasing its presence in Europe.
This blog was updated at 3:30 p.m.
Gateway announced Monday that it has agreed to take over the controlling stake in Paris-based PC vendor Packard Bell.
Gateway has exercised its right of first refusal to purchase all of the shares of PB Holding Company, the parent company of Packard Bell, from Lap Shun (John) Hui and Clifford Holdings Limited, also controlled by Hui. Both companies control 75 percent of Packard Bell stock. Financial details of the transaction have not yet been disclosed.
The announcement wasn't a surprise--Gateway and Lenovo have waged a public battle over Packard Bell--with Gateway announcing its intentions in August. (Recently, according to a Reuters report, Lenovo CEO Bill Amelio told reporters, "Packard Bell is a great fit, and we're still very interested...It's not over until it's over.")
Lenovo did not respond to a request for comment.
Gateway announced its own acquisition in August by Acer, which has agreed to fund the purchase of Packard Bell.
The Gateway-Packard Bell union has a somewhat convoluted, overlapping back story. Hui, who is selling his shares of Packard Bell, is a former executive of eMachines, the tiny computer maker that Gateway purchased in 2004 for $262 million in a bid to increase its market share. Two and a half years after that sale, in an unsolicited bid, Hui offered to buy out Gateway's retail PC business--mainly the eMachines brand--an offer that was flatly rejected.
Gateway's acquisition of Packard Bell on behalf of Acer is partly a defensive move for Acer, which is intent on taking over Lenovo's position as No. 3 PC maker in the world.
Though Packard Bell isn't well-known stateside, it has strong brand recognition in Europe, much like Gateway does here in the U.S.
"From Acer's perspective, they know Lenovo's strong in Asia, and they know Lenovo wants to grow in the U.S. and Europe," said Samir Bhavnani, an analyst with Current Analysis West. "This throws up a little bit of a block and gives Acer an advantage in Europe."
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