Acer Inc, the world's fourth-largest PC maker, said yesterday it plans to buy US-based Gateway Inc for US$710 million, in a deal that would push it past China's Lenovo Group Ltd (
Acer is offering US$1.9 a share for Gateway, which represents a 57 percent premium over Gateway's closing price of US$1.21 last Friday. Acer will offer the tender, which totals US$710 million, over the next 10 days, it said.
The takeover will double Acer's 5.2 percent market share in the US and give it an option to buy Packard Bell NV in Europe, whose largest shareholder -- John Hui (
Gateway has the right of first refusal, which it signed last year with Hui. The pact allows the sale of Packard Bell to a third party only if Gateway has no intention of buying the former.
That could rule out Lenovo Group's bid to acquire Packard Bell, despite an already-signed memorandum of understanding with the Netherlands-based firm.
"With the synergy among the three parties in place, we will be able to save at least US$150 million in procurement of key components a year," Acer chairman Wang Jeng-tang (
"This strategic transaction is an important milestone in Acer's long history," Wang said in a statement.
"This will be an excellent addition to Acer's already strong positions in Europe and Asia," Wang said.
"These three brands will enable us to target different market segments at different geographical regions," Acer president Gianfranco Lanci said.
The combined sales of Acer and Gateway will top US$15 billion with shipments of more than 20 million PCs, Acer said in a statement.
"This will complete Acer's global footprint by strengthening our US presence," Wang said.
Ed Coleman, chief executive of Gateway, welcomed the move.
"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.
About US$150 million will be saved from the merger of the companies, Acer said, without specifying a timeframe.
Simon Yang (楊勝帆), an analyst at Taipei-based Topology Research Institute (拓墣產業研究所), echoed Wang's views.
With Acer trailing Lenovo in the Greater China region and North America, the deal will provide a new opportunity for the Taiwanese company to grab a stronger foothold in the fast-growing North American market, Yang said.
PC sales in North America have been growing at an annual rate of 50 percent over the past years, he said.
The transaction will be subject to scrutiny by US regulators and is expected to be completed by December.
Acer reported a decline of 36 percent in second-quarter net income to NT$1.98 billion (US$61 million) yesterday, while Lenovo gained customers.
Acer shares closed down 1.9 percent to NT$63.60 in Taipei yesterday, before the earnings and acquisition announcements were made.
Gateway, founded in 1985, acquired rival eMachines in 2004 and had 1,645 employees as of April, its Web site said.
The company -- the No. 4 PC manufacturer in the US -- withdrew from European and Asian markets in 2001 in order to cut costs.
Additional reporting by bloomberg and AP