Gateway is acquiring a 75 percent interest in European PC vendor Packard Bell f

[Sunite]

 Gateway is acquiring a 75 percent interest in European PC vendor Packard Bell from major shareholder Lap Shun Hui, who sold eMachines to the U.S. PC-maker in 2004. Hui and Gateway -- which itself is well on the way to being acquired by Acer for $710 million in an all-cash transaction -- have agreed to work together to secure the requisite antitrust approvals required for closing the Packard Bell deal.

Acer said it would fund the undisclosed amount that Gateway is paying to acquire controlling interest in the Paris-based PC-maker. The acquisition, which is part of the Taiwan-based PC-maker's long-term strategy to complete its global footprint, is expected to close in this year's fourth quarter or in the first quarter of 2008.

The timing of Acer's latest moves appears to be dead on. "Our latest forecast for the worldwide market is 12.3 percent (growth) for 2007 and 11.0 percent for 2008," observed Gartner principal analyst Mikako Kitagawa. "For the U.S. market, the forecast is 5.4 percent for 2007 and 6.1 percent for 2008." IDC expects PC growth to continue to register double-digit increases through 2009.

A Dynamic, Competitive Market

"Acer and Lenovo's geographic expansion, combined with Dell's reorganization and Hewlett-Packard's defense of its share gains will make for a dynamic and competitive market," said IDC research manager David Daoud in September. "Smaller vendors are likely to face even more pressure going forward as the largest players consolidate share and reposition themselves."

Gartner is predicting the PC market will slow a bit early next year as desktop growth suffers payback for the strong numbers posted in the first half of 2007. However, the market is expected to "come back in line with our previous expectations later in the year as desk-based PCs experience stronger growth with the onset of a new replacement cycle," observed Gartner research director George Shiffler in late September.

Acer's Packard Bell acquisition through Gateway shuts the door on previous overtures from the Lenovo Group, which had expressed an interest in buying Packard Bell to boost its presence in Europe. The Chinese PC-maker now will be forced to grow its European presence organically, industry observers say.

"Acer is quite strong in the mature regions such as Western Europe and U.S. at a moment," noted Kitagawa. "Lenovo also has decent growth in these regions although Lenovo is not as strong as Acer is."

High-Growth Trajectory

Even prior to its latest acquisition activities -- either directly or through Gateway -- Acer's sales in the worldwide PC market were on a high-growth trajectory. In the year's second quarter, the company's global shipments were up by more than 55 percent from the prior-year period, IDC noted, with growth in all the world's regions exceeding 30 percent.

Also according to IDC, Acer posted a solid 36 percent increase in overall shipments in Europe, Africa, and the Middle East thanks to a strong product lineup and active pricing campaigns in both the retail and SMB Relevant Products/Services channels. "New retail and dealer partner agreements are quickly expanding the company's access to the market, contributing to volume gains," IDC's researchers said.

Acer expects Gateway's Packard Bell acquisition to boost its annual shipments in Europe by 2 million units to 10.8 million PCs, said Acer president Gianfranco Lanci in late August. Lanci added that, on the basis of annualized results from Gartner, the combined sales of Acer, Gateway, and Packard Bell products amount to 21 million units globally.