Lenovo Buys German Computer Seller Medion

The acquisition, Lenovo's biggest since its purchase of IBM's PC business six years ago, comes four months after Lenovo signed a joint venture deal with NEC Corp to sell laptops in Japan.

The deal will double market share to more than 14 percent of the PC market in Germany, Europe's biggest economy, and give the combined company a share of about 7.5 percent in the western European PC market, Lenovo said on Wednesday.

The news pushed Medion's shares 17 percent higher in Frankfurt, but Lenovo shares fell more than 3 percent as some investors questioned the rationale of the purchase.

"Lenovo probably wants to add to its presence in mature markets," said Vincent Chen, an analyst with Yuanta Securities. "The question is why Germany, because that's a very slow growth market and it raises questions on how much benefit this will bring to them."

At the same time, larger rival Acer, the world's No.2 PC maker, said it will take a $150 million charge to write down excessive inventory and cover potential accounts receivable problems in Europe, and will also lay off 300 staff in the region.

Medion is a supplier of low-priced computer and electronic devices based in the western German city of Essen. It became a household name after it started cooperating with German discount retail chain Aldi almost two decades ago.

It was founded by Brachmann, a TV engineer, who launched his business by importing non-food items, such as microwaves, from Asia.

The two companies agreed that no jobs would be cut or sites shut down as a result of the takeover, and Medion's management will remain in place.

LOOKING FOR VOLUME

Lenovo, maker of the Thinkpad laptop, will pay 231 million euros ($340 million), or 13 euros per share, to Medion's biggest shareholder Brachmann for a 36.6 percent stake.

Brachmann owns almost 55 percent and will keep about 20 percent of the shares. CFO Eigen, who holds 75,000 shares, has also agreed to divest his stake, and Lenovo will make a conditional offer to all other shareholders.