SNI, Acer negotiations collapse

German PC maker Siemens Nixdorf Informationssysteme AG and Acer have broken off their talks to sell SNI's PC manufacturing division to the Taiwanese company, the companies announced yesterday. The two companies signed an agreement in April that called for Acer to take over SNI's PC production facility in Augsburg, Germany. Acer admits the Asian financial crisis played a role in its failure to agree financial terms.

German PC maker Siemens Nixdorf Informationssysteme AG and Acer have broken off their talks to sell SNI's PC manufacturing division to the Taiwanese company, the companies announced yesterday.

The two companies signed an agreement in April that called for Acer to take over SNI's PC production facility in Augsburg, Germany. The deal would have given Acer the necessary volume it needed to produce PCs more cheaply on a global scale.

Negotiations fell through because Acer and SNI could not agree on financial terms, according to statements from both SNI and Acer. The financial crisis in Asia and Russia also played a role, Acer said, forcing it to exert more caution in its financial investments.

The climate has forced Acer to refocus its corporate strategy, especially in the area of semiconductors. "Acer is now committed to giving top consideration to ASMI (Acer Semiconductor Manufacturing Inc.) in terms of supplying working capital and making all necessary financial arrangements," said Simon Lin, Acer president and chief executive officer, in the Acer statement.

Under the proposed agreement, Acer would have taken over PC production, distribution and research and development, while SNI retained control of sales, marketing and product planning and specifications.

It looks as if SNI will continue to shop around the divisions originally designed for Acer, however. SNI has spun off these areas into a separate legal entity called PCS GmbH & Co.KG, and will be "open to cooperation," according to Doris Larmann, a SNI spokeswoman.

The reorganisation of parent company Siemens AG's PC and telecommunications divisions into one unit -- effective Oct. 1 -- is a step towards helping SNI purchase PC components more cheaply, Larmann said.

"But the problem of producing sufficient volume still remains, " she said. Combined, SNI and Acer would have produced roughly 8 million PCs annually, she said. The Augsburg plant alone manufactures some 1.4 million PCs.

The collapse of the proposed agreement was also regrettable, SNI Chairman Gerhard Schulmeyer said in a statement, "because both sides had agreed on the basic business strategy and had found good solutions on all major negotiating points."

There were some signs of trouble in the negotiations, however. In July, the companies conceded that negotiations were taking longer than expected.

SNI is a subsidiary of Siemens AG, based in Munich and Berlin. Siemens Nixdorf can be reached on the World Wide Web at http://www.siemens-nixdorf.com/.

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