EC clears Lenovo's Medion takeover

PUBLISHED : Thursday, 28 July, 2011, 12:00am
UPDATED : Thursday, 28 July, 2011, 12:00am

Lenovo Group moved a step closer to expanding its operations in western Europe after regulators approved its Euro466 million (HK$5.25 billion) purchase of a controlling stake in German firm Medion.

In a filing with the Hong Kong stock exchange yesterday, Lenovo chairman and founder Liu Chuanzhi said the deal had received 'antitrust clearance from the European Commission'.

The transaction, when completed, will mark Lenovo's biggest acquisition since it bought the personal computer business of IBM Corp for US$1.75 billion in 2005.

In a statement, the European Commission said Lenovo's acquisition of Medion was cleared after its examination found that 'the merged entity will continue to face several strong and effective competitors in the market'.

'The main impact of the proposed operation would be in the PC markets in Germany and in Denmark, in particular for desktop and portable PCs,' the Brussels-based commission said. 'However, the combined market shares of the merged entity remain moderate and it will continue to face strong and effective competitors such as Acer, HP or Asus.'

Lenovo, the world's third-largest supplier of personal computers, is also one of the mainland's major manufacturers of media tablets and smartphones. Medion has been ranked No18 among the industry's biggest personal computer suppliers by market research firm Gartner.

'The Medion acquisition will provide Lenovo with a broader product portfolio, including several other consumer electronic products,' said Eszter Morvay, a research manager at market analyst firm International Data Corp.

Wong Wai-ming, Lenovo's chief financial officer, said last month that the addition of Medion's operations would give the Chinese company an estimated 7.5 per cent market share in western Europe's personal computer market. Lenovo also expects to realise cost savings through economies of scale in buying components and other materials, global supply chain, software development and distribution channels.

The deal is expected to close next month and give Lenovo between 55 and 80 per cent stake in Frankfurt-listed Medion. In the near term, Lenovo and Medion will continue to maintain their own product brands.