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Shares in Lenovo rise sharply as firm plans to strengthen its European operations

Lenovo aims to buy Packard Bell

Reuters has reported that the Lenovo group is aiming to buy rival Packard Bell.

Currently the world’s third largest PC vendor, Lenovo has been struggling to make profit in Europe.

The move has sent Lenovo shares soaring, with a three per cent increase reported. Lenovo’s shares closed up 2.2 per cent higher on Wednesday after the firm indicated that it was planning to buy rival Packard Bell.

Some analysts believed it was a positive move for the vendor: "The acquisition is positive for Lenovo, as Packard Bell can help Lenovo penetrate the European consumer segment quickly. The consumer segment accounts for about 40 per cent of the total EMEA market but Lenovo has almost no presence in this segment," Cazenove analyst Zhao Xin, told Reuters.

However, not everyone was so sure any potential purchase would be beneficial to the vendor. "Lenovo’s move deeper into the consumer markets of the U.S. and Europe could depress margins. We believe HP and Acer remain very aggressive in building market share," wrote Deutsche Bank’s Alan Hellawell.

The Hong Kong Economic Journal has this week reported that Lenovo and Acer had previously expressed interest in Packard Bell. Lenovo denied Acer was involved.

Acer, however, have long been rumored to be in negotiations, as reported in July by PC Retail. The Taiwanese vendor may now increase its interest in securing a deal with the European vendor. Acer’s shares saw a jump of 4.8 per cent on the news.

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