Thu, Aug 30, 2007 - Page 12 News List

Gateway bid responsible for share drop: Acer


Acer Inc, the world's fourth-largest personal computer maker, yesterday saw its share prices plunge by the daily limit for the second day, reflecting market doubts over its bid for US-based Gateway Inc.

"We will continue to communicate with investors and the media on the buyout" to allay market concerns over the deal, Acer spokesman Henry Wang (汪島雄) said by telephone yesterday.

"The announcement [made on Monday] was made immediately after the deal had been sealed. More communication will take place once concrete details are available," Wang said.

Shares closed down nearly 7 percent to NT$55.10 (US$1.7) yesterday on the Taiwan Stock Exchange, marking the largest two-day drop since the company's initial public offering in September 1996.

Investors were worried about the stock after analysts slashed their rating recommendations for Acer as they believed the deal -- in which Acer agreed to offer a 57 percent premium over Gateway's closing price last Friday -- was too expensive.

Acer chairman Wang Jeng-tang (王振堂) was surprised by the share fall but remained confident over the success of the deal.

"The merger will be a success. And if we fail, I will quit my position," the Chinese-language Economic Daily News quoted Wang as saying earlier yesterday.

Acer said on Monday it would buy US-based Gateway for US$710 million, in a deal that would push it past China's Lenovo Group Ltd (聯想) to become the world's third-largest PC vendor.

Fitch Ratings yesterday placed its ratings on Acer on "Rating Watch Negative," putting more pressure on the company.

Fitch said in a statement it was concerned over Acer's multiple-brand strategy, possible lower profitability during the initial stages of the merger and Acer's reduced cash positions after the deal.

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