Acer to acquire Gateway for $710 million

Acer plans to acquire Gateway in a deal worth US$710 million that Acer says will make it the world's third-largest PC vendor.

Under terms of the agreement announced Monday, Acer will purchase all of Gateway's outstanding shares for US$1.90 per share. The deal has already been approved by the boards of directors at both companies and should be completed by the end of this year, subject to government approval, Acer said in a statement. Gateway's shares ended at US$1.21 Friday on the New York Stock Exchange.

"This is the biggest acquisition in Acer's 30 year history," said J.T. Wang, Acer's chairman, speaking at a news conference in Taipei.

"After this acquisition, we are solidly number three in the global PC market," Wang said.

Acer's acquisition deal with Gateway also derails rival Lenovo Group's plans to acquire Packard Bell.

Alongside the acquisition deal with Acer, Gateway unveiled plans to exercise its right of first refusal to acquire shares in Packard Bell's parent company, PB Holding SARL, from John Hui. Hui is the founder of eMachines, which Gateway acquired in 2004, and the largest shareholder in Packard Bell.

Gateway did not disclose how much it has offered for Hui's stake in PB Holding.

Acer's efforts to overtake Lenovo will get a big boost from Gateway, which was the world's eighth largest PC vendor during 2006. Together Acer and Gateway shipped 18.6 million PCs during 2006, compared to 16.6 million PCs shipped by Lenovo.

The Gateway acquisition will have the greatest impact in the U.S., where Acer has been growing fast but remains in sixth place among PC vendors.

"This is definitely a good play for them from the U.S. consumer perspective," said Bryan Ma, director of personal systems research at IDC Asia-Pacific. However, the big question is how Acer plans to integrate Gateway with its own operations, and how smoothly the integration process will go, he said.

Acer's share of the U.S. PC market grew 164 percent during the second quarter of 2007, compared to the same period last year. Acer shipped 888,000 PCs to U.S. customers, giving the company a 5.2 percent share of the market.

By comparison, Gateway was the fourth-largest PC vendor during the second quarter, shipping 965,000 PC and taking 5.6 percent share of the U.S. PC market. The Gateway acquisition vaults Acer into the number three spot in the U.S. PC market, behind only HP and Dell.

"Acer is an outstanding strategic partner for Gateway," said Ed Coleman, CEO of Gateway, in a video feed at the Taipei news conference to announce the deal.

Gateway exited the Australian PC market in August 2001.

Gateway reported net income of US$1.9 million for the second quarter, compared to a loss of US$7.7 million one year earlier. The company said gains in its retail division during the period were offset by declining revenue in its professional and direct divisions.

However, talks are currently underway to sell off the professional division to a third party, Gateway said Monday. The company did not offer details of those discussions.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Sumner Lemon and Dan Nystedt

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?