China-based PC manufacturer Lenovo is acquiring German-based wholesaler of PCs, multimedia products, mobile communication service and consumer electronics Medion. The acquisition will double Lenovo's market share in Germany to 14 percent and fuels Lenovo's expansion in consumer PCs and the mobile internet market. Medion complements Lenovo as it has strong consumer sales, marketing, services and retail capabilities, which can be strengthened with Lenovo's back-end manufacturing capability and supply chain. Under the terms of the agreement, Lenovo will commence a public offer for all outstanding public shares of Medion for EUR 13 per share in cash. The offer price represents a 29 percent premium over the average closing price for the previous 30 calendar days and a 27 percent premium over the average closing price for the previous 90 calendar days. Under a separate agreement, Medion CEO Gerd Brachmann has agreed not to participate in the public offer, but to sell 40 percent of Medion's outstanding shares to Lenovo at EUR 13 per share. 80 percent of the purchase price to Brachmann shall be paid in cash and 20 percent in Lenovo shares. The public offer is conditional on a minimum participation level of at least 15 percent of Medion's outstanding shares by shareholders other than Brachmann. He will stay as a major shareholder – holding 20 percent of the shares – at Medion.
After the transaction, both companies expect that all their existing operations, including customer service, product delivery and warranty fulfillment, will continue business as usual. In the near term, Medion and Lenovo will continue to maintain their own product brands and provide sales and support through existing channels. The transaction is already approved by the boards of Lenovo and Medion. The transaction will be financed from Lenovo’s existing cash resources and is expected to close in the third quarter of this year. Medion sells PCs and multimedia devices under its own brand in Western Europe and manages the mobile services offered by discount super market chain Aldi in Germany, Belgium and the Netherlands.
