Lenovo Agrees To Buy German PC Company Medion

The cash and stock deal, which is valued at approximately $670 million, would be Lenovo's largest acquisition since the company agreed to buy IBM's PC division in 2004. When completed, Lenovo said the deal will double its market share in Germany and make it the third-largest PC maker in the country with around 14 percent market share. The addition of Medion will also give Lenovo 7.5 percent of the PC market in Western Europe.

“This agreement represents another bold move for Lenovo to realize its long-term strategy. It will complement both Lenovo's core PC business and new businesses, which are key areas for development,” said Yang Yuanqing, Lenovo's CEO, in a press statement. “With their strong consumer sales, marketing, services and retail capabilities, MEDION AG’s business is perfectly aligned with our consumer growth strategy in Western Europe.”

Under the terms of the agreement, Lenovo will purchase a 37 percent stake in Medion from its chairman Gerd Brachmann for 13 Euros per share in cash; Brachman will remain a major shareholder in the company, retaining about 20 percent of Medion's shares.

Lenovo will also commence a public offer for all outstanding public shares of Medion for 13 Euros per share in cash. According to Lenovo, the offer price represents a 29 percent premium over the average closing price for the previous 30 calendar days. The deal is expected to close in the third quarter.

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Lenovo has solidified its position as the fastest growing PC maker in the industry over the last two years, thanks in large part to its growing consumer business in China and its loyal commercial customer base in North America. But Lenovo executives have said they plan to put a greater focus on emerging markets as well as mature markets like Europe and Japan where Lenovo's market share is weak.

In January Lenovo struck a strategic alliance with NEC focused on the PC market in Japan. The two companies formed a joint venture, dubbed NEC Lenovo Group Japan, that created the largest PC business in the country.