Acer to grab Gateway for $710m
The cow jumps over the Pacific
Acer plans to buy Gateway in a deal worth $710m, which will make Taiwan's computer giant the third-largest computer supplier in the world.
Under the agreement, Acer has made a cash offer to buy all outstanding shares of Gateway for $1.90 per share. Acer said the purchase will create a combined company worth $15bn in revenues, shipping over 20 million computers every year.
The acquisition has been approved by the board of directors at both companies and is expected to close by December 2007. Gateway said it is currently in talks with a third party about selling its ailing Professional business.
Acer said the takeover will push it to the number three spot in worldwide PC shipments. The company is just behind Lenovo in shipments — but still many millions of units behind market leaders HP and Dell according to market analyst firm IDC.
"The acquisition of Gateway and its strong brand immediately completes Acer's global footprint, by strengthening our US presence," said Acer chairman, JT Wang in a statement. "This will be an excellent addition to Acer's already strong positions in Europe and Asia."
According to IDC's second quarter numbers, Gateway is the third largest PC vendor in the US, holding 5.6 per cent of the market state-side. Gateway reported net income of $1.9m for the second quarter, compared to a $7.7m loss a year earlier. Acer's own renewed efforts in the US market have put them on the radar with 5.2 per cent of the US market — up 163.8 per cent from last year.
Acer's bid for Gateway will also likely thwart Lenovo's plans to acquire Packard Bell. Last year, Gateway signed an agreement with John Hui, owner of Packard Bell, that gave Gateway the right to refuse an offer should Hui decide to sell PB Holding, the parent company of Packard Bell. And that's exactly the muscle they intend to flex.
Riding along the acquisition announcement, Gateway announced it will exercise its right of first refusal. This means if Lenovo wants to sit down at the negotiating table with Packard, they have to get Gateway's permission first.
Acer expects the considerable increase in scale of the combined companies to result in reduced component costs. Pre-tax "synergies" will be at least $150m, according to Acer.
A $710m price tag shows that for Gateway, staving off ogling eyes until now wasn't worth the wait. In 1997, Gateway founder Ted Waitt was reportedly prepared to sell the company for $7bn to Compaq before having a last minute change of heart. ®
COMMENTS
Worth the waitt?
Why is a $710m price tag worth the wait over a $7bn offer 10 years earlier? I took the day off yesterday and, of course, need some re-training today but I just can't figure this one out. Compac's offer was (almost) ten times greater (and that's using the US version of a billion). Someone please explain...
Moo!
My first two PCs were from Gateway 2000 (as they used to be known). They were pretty good boxes and came with loads of decent software. In fact my parents have only just stopped using my old P3 purchased w-a-y back in 1999. I'm still using the Boston Acoustics sub and speakers from that PC.
The only down side was the support, it was bloody useless. Once I called up to get some Win 95 drivers, and after I'd sent them some floppies(!) I eventually got some pre-release beta drivers. In the meantime I'd managed to download some kosher ones. Another time I had a duff CD, and called to get a replacement. After being sent a CD I already had (not the duff one) and getting I passed round several departments I ended up telling some support muppet the part number of the CD ("...no you wouldn't have the part number..."). And lo a few days later I had my CD.
Not long after they pulled out of the UK (Europe as well I believe) and so I was left to build my next PC myself...
Gateway and the good old days
My first PC that did cool things (like run windows 3.11 and have the internet) was a Gateway 2000. Was a cracking wee machine and the cow theme was a lot of fun! I only stopped using the keyboard from it a few months ago.
A wee look at Yahoo finance shows an interesting graph though year 2000 share price >$60 2007 sold at a premium of $1.90.
OUCH!
Chris
why would they...
buy a nasty company like gateway. gateway 'was' a good company once but I have a pc in front of me now with a BIOS which will not switch off the onboard usb ports, Normally not a problem but in this case it is. The intel reference BIOS has had 4 updates gateway none (& no, due to gateways board setup I cannot use the reference BIOS).
