PB-NEC merger puzzles industry

PB-NEC merger puzzles industry

US Packard Bell and Japanese NEC are to merge their PC operations into a new company to be called Packard Bell-NEC. While only a memorandum of understanding at the moment, the deal is expected to go through, as PB is reputedly in the middle of a cashflow problem. NEC already holds 19.99 per cent of PB, as does France's Groupe Bull, but would effectively raise this to 40 per cent by transferring $US300 million in NEC assets to PB.

The new venture will eventually sell PCs under the PB-NEC brand name, but in the meantime will continue to run separate lines. The lines may remain separate in this part of the world. NEC plans to direct the technical side of the new company.

PB in Australia has said it isn't able to comment on the announcement yet, while NEC said it expects great things to come from the merger. The two companies sell into quite different markets in Australia, yet their combined sales could make them the largest player here.

Reaction outside the companies is generally one of puzzlement. Some analysts say NEC has already poured far too much money into PB, and the new move doesn't appear to help NEC in its long-term strategy. It is possible that the new company will benefit by economies of scale and greater buying power, say analysts. Packard Bell bought Zenith Data Systems recently, and it is unsure if this will remain as a separate brand.

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