If successful, the deal would allow the third largest PC maker to quickly grab market share in a region where it is ranked sixth and barely profitable.

"It's like a cardiac stimulant. It will help Lenovo to guarantee growth, especially in Europe," said JP Morgan analyst Charles Guo. "And it should help them maintain their global No. 3 PC vendor position."

Lenovo, just starting to turn around its U.S. operations, said on Tuesday it was in exclusive talks to buy PC maker Packard Bell BV - which IDC estimates ranks ninth in global PC sales with 2 percent market share - from owner John Hui.

One of a handful of Chinese companies trying to forge a global brand by investing abroad, it dropped to fourth globally in the first three months of 2007 but reclaimed the No. 3 spot from Acer a quarter later, riding an upswell of corporate demand.

"Based on an assumption that Packard Bell's topline is €1.5 billion ($2.06 billion), net margin is 2.5 percent and 15 times PE, the deal is estimated at $700 million to $800 million," said Cazenove's Zhao Xin.

By: DocMemory
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