Lenovo acquires Medion to expand its business in Western Europe
The agreement brings together the world’s fastest-growing PC company and Europe’s largest seller of PCs, multimedia products and digital services to accelerate the growth of the consumer business on the continent.
Lenovo, the world’s fastest-growing PC company, has announced the acquisition of German company Medion, a leader in PC, multimedia products, mobile communications services and consumer electronics sales. Following the acquisition, Lenovo will double its share of the German market, making it the third largest PC maker in Europe’s largest PC market. Together, the two companies will have a market share of more than 14% in the German and nearly 7,5% in the Western European PC market. The agreement also promotes Lenovo's expansion in the consumer PC and fast-growing mobile Internet markets.
“This agreement is another bold step for us to implement our long-term strategy. At the same time, we are complementing Lenovo’s core PC business and opening up new business areas that are essential for growth, ”said Yang Yuanqing, CEO of Lenovo. “With its strong consumer sales, marketing strategy, services and retail capabilities, Medion’s business model is a perfect parallel to our strategy to help grow consumer interest in Western Europe. Combining these capabilities with Lenovo's manufacturing capabilities and supply chain will make both companies even more successful and competitive. Together, we can build a complete consumer platform that fits perfectly with our customers, which will simultaneously accelerate our PC business and provide us with the capabilities, expertise and networking we need to win a position in the mobile and Internet devices market. ”
The two companies want to take advantage of the additional benefits of collaboration, such as a global presence, cost savings, opportunities provided by a global supply system, and software development. They would build even higher levels of collaboration in terms of sales channels, business model and product innovation.
“This announcement will strengthen Medion’s competitive market position while maintaining stability, flexibility and the existing corporate structure in Essen,” said Gerd Brachmann, Medion’s founder and CEO. “I am very proud to have become one of the most important private investors in the world’s fastest growing PC company. Together with the management of Medion, we look forward to seizing the opportunities offered by the collaborations and realizing the business growth ambitions shared by both companies. ”
Under the terms of the agreement, Lenovo will make a public offer for all outstanding public Medion shares at a price of EUR 13 per share. The offer price represents a 29 percent surcharge over the average price closing the previous 30 calendar days and a 27 percent surcharge over the average price closing the last 90 calendar days.
In a separate agreement, Gerd Brachmann agreed not to participate in the public offering but to sell 40 percent of Medion’s outstanding shares to Lenovo at a price of € 13 per share. Lenovo will pay 80 percent of the purchase price to Gerd Brachmann in cash, and 20 percent will be paid in Lenovo shares. One of the conditions of the public acquisition is that the additional shareholders of Medion will participate in the sale with at least 15 percent of the outstanding shares.
After the merger, both companies expect existing services, such as customer service, product delivery and warranty services, to continue to operate on a regular schedule. In the near future, Medion and Lenovo will continue to maintain their own brands and sales will continue, and all related services will continue to operate through existing channels.
The transaction has already been approved by the board of directors of Lenovo and Medion, which includes the usual final provisions, including minimum participation in public procurement and regulatory approvals. The transaction will be funded from Lenovo's available cash resources. The public procurement is expected to close in the third quarter of 2011.
