In a bid to form the third largest computer company in the world, Taiwan-based Acer Inc. announced Monday that it has entered into a definitive agreement to acquire PC maker Gateway, Inc. in a share buyout worth approximately $710 million.
Under the terms of the agreement, Acer will commence a cash tender offer to purchase all the outstanding shares of Gateway for $1.90 per share, which represents total equity value consideration of approximately $710 million. The acquisition has been unanimously approved by the boards of directors of both Gateway and Acer and is subject to standard closing conditions, including approval under Hart Scott Rodino, Exon Florio and similar laws outside the U.S.
"This strategic transaction is an important milestone in Acer's long history," said J.T. Wang, Chairman of Acer. "The acquisition of Gateway and its strong brand immediately completes Acer's global footprint, by strengthening our US presence. This will be an excellent addition to Acer's already strong positions in Europe and Asia. Upon acquiring Gateway, we will further solidify our position as number three PC vendor globally."
Once completed, the deal will push the combined company's US-based PC market share to over 10 percent, or nearly twice that of Cupertino-based Apple Inc. The combination of Acer and Gateway is also expected to result in significant revenue and cost synergies, the two companies said. This considerable increase in scale should result in reductions in per unit procurement and component costs for both companies, translating into significant cost savings through the increased efficiency of the combined back-office functions.
Gateway, which had previously announced its intentions to purchase all controlling shares of European PC vendor Packard Bell BV, also revealed Monday that it is in discussions with a third party with regards to a sale of its U.S. based Professional business.
34 Comments
Interesting how a company that has a higher marketshare (in the US, mind) can be bought by some 6-7% of Apple's war chest.
/Adrian
Gateway is worth $710 million? I would have never thought they were worth that much. Glad I don't work for them anymore.
"The acquisition of Gateway and its strong brand immediately completes Acer's global footprint, by strengthening our US presence... we will further solidify our position as number three PC vendor globally."
Okay, Gateway's strong brand? I know they've been around for a while here, but ever since their stores started shutting down - I've seen very little from them, in fact I wasn't even sure they were around anymore. I'm not sure I would classify their brand as strong.
And as for the second part of that quote - I had to laugh. That's a good position to solidify - number 3!
I realize that's a big deal in a global market, but it still sounds funny.
Interesting how a company that has a higher marketshare (in the US, mind) can be bought by some 6-7% of Apple's war chest.
/Adrian
Yeah, that struck me too. A notionally more successful PC maker actually has a market cap that's a small fraction of Apple's.
They have a strong brand -- cow spots on their shipping boxes and empty spaces in strip malls where you can just make out the words "Gateway Country" on the sunbleached bricks above. How much stronger can you get?