Taiwan's Acer To Acquire Gateway
Acer Inc. plans to acquire U.S. computer maker Gateway Inc. for $710 million
in a deal that will push the Taiwanese company past China's Lenovo Group as
the world's third largest vendor of personal computers.
Acer said Monday it is offering to buy Gateway for $1.90 per share in a deal
expected to close by December, pending regulatory approvals in Taiwan and the
The offer price amounts to a premium of 57 percent to Gateway's Friday closing
price of $1.21. Gateway traded at $81.50 in 1999.
Gateway shares jumped nearly 49 percent, or 59 cents, to $1.80 Monday.
The acquisition has been unanimously approved by the boards of directors of
both Gateway and Acer and is subject to standard closing conditions, it said.
The deal will create a multi-branded computer company with over $15 billion
in revenues and shipments in excess of 20 million units per year, Acer said
in the statement.
"This strategic transaction is an important milestone in Acer's long history,"
said J.T. Wang, Acer's chairman, in the statement. "This will be an excellent
addition to Acer's already strong positions in Europe and Asia."
Acer President Gianfranco Lanci said the acquisition will allow Acer to implement
an "effective multi-brand strategy and cover all the major market segments."
The takeover will result in reductions in per unit procurement and component
costs, and also create an opportunity for the cross-selling of product portfolios,
Ed Coleman, chief executive of Gateway, welcomed the buyout.
"Joining with Acer will enable us to bring even more value to the consumer
segments we serve and capitalize on Acer's highly regarded supply chain operations
and global reach," he said in the statement.
In the second quarter, Acer was the world's fourth-largest PC maker behind
U.S.-based Hewlett-Packard, No. 2 Dell, and third-ranked Lenovo Group Ltd. of
China, according to research company Gartner Inc. Irvine, California-based Gateway
is the third-largest PC vendor in the U.S. by market share after Hewlett-Packard
Co. and Dell Inc.
Bryan Ma, an analyst at U.S. market research firm IDC, told Dow Jones Newswires
that Acer's acquisition of Gateway is expected help the Taiwan company's relatively
weak presence in the U.S.
"Acer ranked sixth in the U.S. market, while Gateway ranked third as of
the second quarter. Combined, they are expected to double their shipments,"
Citigroup Inc. is the financial adviser for Acer, while Goldman Sachs Group
Inc. is acting as the financial adviser for Gateway.