Dragon snack
June 2, 2011![Medion logo and shopping carts](https://static.dw.com/image/1942550_800.webp)
Chinese computer giant Lenovo has made a successful offer for Medion, a German consumer electronics company best known domestically for its budget PCs available at Aldi discount grocery stores.
Under the deal, Lenovo plans to buy a 36.6 percent stake from Medion founder and chief executive Gerd Brachmann, who currently owns more than 55 percent of the company. It then wants to extend the 13-euro-a-share offer to other shareholders to build a controlling stake for a total price of 466 million euros.
The deal therefore values Medion at 629 million euros ($906 million). This represents an 18 percent premium on Tuesday's trading price for Medion shares.
"It's important to us that Medion is preserved in its structure; with its service and distribution," Christian Eigen, the company's chief financial officer, told Reuters. He added Medion had actively sought a buyer and chose Lenovo - the world's fourth-largest PC company - as a partner.
Founded in 1983, Medion builds PCs and a range of consumer electronics specifically tailored for retailers' sales promotions. Because the company takes batch orders from retailers, it saves on warehouse costs. It also offers extensive customer support.
Market access
Christof Römer, of the Cologne Institute for Economic Research, says the purchase is a way for Lenovo to improve its access to the German market.
"If they want better access to production workflows which are non-transferrable, then they simply invest in foreign companies," he told Deutsche Welle. "The Chinese could be interested to know how companies sell products inexpensively in Germany, and how they can get foothold in that market."
Lenovo, which is widely known for having purchased IBM's PC division in 2005, will double its market share in Germany to 14 percent through the purchase. That will put it in third place after HP and Acer.
An official offer for Medion is expected in 14 days. Company founder and primary shareholder Gerd Brachmann has said he plans to reduce his holdings from 55 percent to 20 percent.
Medion, which was first publically traded in 1988, posted turnover of 1.64 billion euros during its 2010 business year. It made 28 million euros in profit before taxes and interest.
Author: Gerhard Schneibel, Monika Lohmüller
Editor: Sam Edmonds