Acer to acquire Gateway

Competing with Lenovo is goal of buy

Acer plans to acquire Gateway in a deal worth US$710 million (NZ$994 million) that Acer says will make it the world's third-largest PC vendor.

Under terms of the agreement, Acer will purchase all of Gateway's outstanding shares for US$1.90 per share. The deal has already been approved by the boards of directors at both companies and should be completed by the end of this year, subject to regulatory approval, Acer says.

"This is the biggest acquisition in Acer's 30 year history," said JT Wang, Acer's chairman, speaking at a news conference in Taipei.

"After this acquisition, we are solidly number three in the global PC market," Wang said.

Acer's efforts to overtake Lenovo will get a big boost from Gateway, which was the world's eighth largest PC vendor during 2006. Together Acer and Gateway shipped 18.6 million PCs during 2006, compared to 16.6 million shipped by Lenovo.

The Gateway acquisition will have the greatest impact in the US, where Acer has been growing fast but remains in sixth place among PC vendors.

"This is definitely a good play for them from the US consumer perspective," says Bryan Ma, director of personal systems research at IDC Asia-Pacific. However, the big question is how Acer plans to integrate Gateway with its own operations, and how smoothly the integration process will go, he says.

Gateway reported net income of US$1.9 million for the second quarter, compared to a loss of US$7.7 million one year earlier. The company says gains in its retail division during the period were offset by declining revenue in its professional and direct divisions.

However, talks are currently underway to sell off the professional division to a third party.

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