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By | Drew Cullen 9th October 2007 04:29

Gateway and Packard Bell is done deal

Subject to regulators, workers etc.

Gateway, the US PC maker that is to be bought by Acer, the Taiwanese PC maker, is to buy Packard Bell, the (once Israeli, then Japanese, now) French PC maker that was going to be bought by Lenovo, the Chinese PC maker, which (according to rumours) had outbid Acer, which also wanted to buy Packard Bell. Got that? Good.

Gateway had already announced that it would exercise right of first refusal to buy Packard Bell: yesterday it said it had funding in place from Acer. And that it had delivered a binding offer for the company. Next step is to sweet talk workers' councils in France and the Netherlands and to push the deal through sundry regulators.

In August, Packard Bell owner John Hui confirmed that he would sell the company to Lenovo. But later that month, Acer took the wind out of Lenovo's sails by making an agreed $710m bid for Gateway. That deal has yet to complete. Gateway bought Hui's previous company, eMachines in 2004. Under non-compete agreements, the company acquired the right of first refusal to buy Packard Bell from Hui, when he bought his new company last year.

Packard Bell remains big in European retail circles, but is a shadow of its former self. When Hui bought the company it was said to be turning over $1bn a year and to be lossmaking. OK, so the company will bulk up Acer-Gateway a little bit more. But who makes money in PC retail?

It is hard to avoid the conclusion that this deal has more to do with Acer delivering a kick at its mainland Chinese rival, than with any pressing commercial logic. ®

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