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Packard Bell, NEC join in huge merger

A merger between Packard Bell and NEC created the largest U.S. PC company.

In a deal that will create the largest PC company in the United States, Packard Bell today announced plans to merge with the personal computer operations of NEC.

The deal, valued at $300 million, will give Packard Bell all of NEC's PC business outside the company's home turf of Japan. The combined company will be called Packard Bell NEC and will be headed by the current CEO of Packard Bell, Beny Alagem. Officials said the merger is expected to be completed by July 1.

Packard Bell NEC will market three PC brands--Packard Bell, NEC, and Zenith Data Systems--and will consolidate manufacturing and sales operations from the companies.

Packard Bell has been on a shopping spree of late. In April, the company acquired Zenith Data Systems from one of Packard Bell's chief shareholders, Groupe Bull.

As a result, analysts said one of the greatest challenges the new company will face is managing its multiple brands of desktop PCs, servers, and portables. "Packard Bell has to manage its growth much better," said Richard Zwetchkenbaum, director of global new media consumer research at International Data Corporation. "They've been a company without a brand management strategy."

Before today's announcement, NEC was already a major shareholder in Packard Bell and will maintain its equity position in the new company.