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In a further blow to Lenovo, Gateway says it will exercise its right to take a first attempt at buying the parent of Paris-based PC maker, Packard Bell BV. Lenovo had also been courting Packard Bell to expand its relatively weak presence in the European consumer market.

Acer claims it has entered a definitive agreement to pay $1.90 per Gateway share. Acer plans to keep the Gateway brand in the United States and said the deal would create a company with more than $15 billion in sales and 20 million PCs shipped per year.

The

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acquisition would help Acer displace Lenovo, which only recently regained its No. 3 spot globally. But Taiwan's most recognized global brand will still be a distant third behind HP and Dell.

"This will now bring Lenovo and Acer into head-to-head competition globally," claims IDC analyst Kitty Fok. "And if Acer manages to acquire both Gateway and Packard Bell, this will help it maintain third place in the world once it reaches it."

Lenovo declined to comment. The company, one of a handful of Chinese firms trying to forge a global brand by investing abroad, said in early August that it was in exclusive talks to buy Packard Bell, valued at around $800 million.

The latest development may mean that Lenovo has to think of other ways to break deeper into Europe, analysts claim.

"Lenovo will have to go back to what they were doing earlier, which is build their own distribution channels. It's taking away their easy entry into the European market," says Jenny Lai, a Taiwan-based analyst with CLSA.

Packard Bell could not be reached for comment. It is a relatively small player at No. 18 worldwide.