Zenith Data’s French Owner Seeks Packard Bell Stake in Joint Pact

The French parent of computer maker Zenith Data Systems plans to acquire 19.9% of Chatsworth-based Packard Bell as part of a joint design and manufacturing alliance, the companies said Tuesday.

The venture between Zenith Data and Packard Bell would give Machines Bull, owner of Zenith Data, a seat on Packard Bell’s board. Zenith Data will supply Packard Bell with private-label versions of its notebook or laptop personal computers, so Packard Bell would be able to broaden its line in the fastest-growing segment of the market.

Packard Bell is one of the largest U.S. mass-market suppliers of desktop personal computers, with sales of $930 million last year. But shipments of Packard Bell’s laptop computers make up less than 5% of its overall shipments, said Beny Alagem, Packard Bell’s president and chief executive.

Financial terms of the alliance were not disclosed. Bull said its main shareholder, the French government, approved the transaction. It remains subject to U.S. regulatory approval.

The alliance would give Packard Bell a welcome cash infusion. Last year, Packard Bell scrapped plans to raise $70 million through an initial public offering because it could not fetch the price it sought for its stock. Although the company has boosted sales by marketing low-priced products with mass merchants such as Sears and Circuit City, it has been weighed down by debt, which totaled $93.3 million at the end of 1991.

Alagem, who formed Packard Bell in 1986, declined to comment on the company’s finances, except to say, “This alliance will allow us to grow.” Alagem said he expects Packard Bell’s sales to top $1 billion this year.

For Zenith Data, based in Buffalo Grove, Ill., the alliance provides access to Packard Bell’s low-cost manufacturing of desktop computers and its network of mass-merchant retailers. Zenith Data was acquired by Bull in 1991 and had sales of about $900 million last year, said Jacques Noels, president and chief executive.

Noels said he expects the first jointly designed product to be ready this fall. But the two companies would not market any product jointly, he said. “They will remain competitive and will remain completely free in whatever markets.”

Packard Bell and Zenith Data both said they expect no staff cuts as a result of the alliance and any joint manufacturing operations. Packard Bell has about 1,800 employees, most of whom work in Chatsworth, where it operates four manufacturing facilities. Zenith Data has plants in Michigan and Massachusetts.