Acer to acquire Gateway for $710 million
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An agreement announced Monday would deliver Gateway Inc. to former rival Acer Inc. for $710 million. The acquisition would make Acer the third-largest PC vendor in the world.
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Computer maker Acer of Taiwan announced yesterday that it would acquire Gateway, the third-biggest U.S. personal-computer company, for about $710 million in cash.
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Gateway computers will be more widely available at Office Depot, in the PC maker&#39;s latest move to broaden distribution at retail stores since acquiring rival eMachines this year.
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Acer's acquisition of Gateway will result in a different product mix starting with some new Gateway laptops to be released early next year, an Acer executive says.
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Gateway Inc. on Monday said its personal computers will be sold at consumer electronics retail giant Circuit City Stores Inc. locations starting next month.
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Yahoo said it had signed a multi-year agreement with Acer to develop a co-branded toolbar and start page for all Acer systems. In addition, Yahoo would become the default search engine on all shipped PCs.
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(InfoWorld) - The chairman and CEO of Acer Inc. has vowed to step down if the company's bid to join with Gateway Inc. does not succeed. "The merger will definitely succeed. If it doesn't ... I will resign," the Chinese-language newspaper, Economic Daily News, quoted Acer Chairman and CEO J.T. Wang as saying in an interview published Wednesday. Acer spokesman Henry Wang confirmed the statement. The statement came amidÂ growing criticism of the acquisition, which the companies' boards have approved. Industry watchers and stock market analysts have called the US$710 million purchase too expensive, saying Acer should have foregone the deal and continued to grow its U.S. business from the ground up. The company's U.S. sales have grown at over 100 percent for the past few years, according to Acer. Other analysts fear Acer may have trouble bringing Gateway into its fold because it may ultimately become a three-in-one deal, including Gateway subsidiary eMachines and Europe's Packard Bell BV. That may be too many companies to absorb in one go, analysts say. "The premium paid to Gateway may be too high, and the execution risk of multiple-brand strategy is clearly the key here," said Vincent Chen, PC industry analyst at CLSA Asia-Pacific Markets in Taipei. Taiwanese investors don't like the deal, either.. Acer's shares have fallen by their daily market limit, 6.9 percent, for each of the past two days to close at NT$55.1 (US$1.67) Wednesday on the Taiwan Stock Exchange. Acer agreed on Monday to buy Gateway in an all-cash deal for US$1.90 per share, a 57 percent premium on its closing share price of US$1.21 on the New York Stock Exchange on Friday. Acer said the deal will transform it into a much larger company with US$15 billion per year in revenue and shipments of nearly 20 million PCs, giving it a solid base in the important U.S. market. The companyÂ plans to market multiple PC brands worldwideÂ after the transaction, thereby increasing sales. The deal will also help it cut costs. Size is vital to gaining volume discounts from parts suppliers, Acer said. The purchase still faces regulatory and shareholder approval. Â
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IRVINE, Calif., Dec. 12  /PRNewswire-FirstCall/ -- Gateway, Inc., the nation's third-largest PC company, has signed a $2.2 million contract to provide Kansas City Kansas Unified School District with more than 1,000 of its award-winning Profile all-in-one desktop PCs.
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(InfoWorld) - Acer Inc.'s agreement to acquire Gateway Inc. has foiled Lenovo Group Ltd.'s plans to buy PC vendor Packard Bell BV, and could leave Acer owning both Gateway and Packard Bell. On August 7, Lenovo revealed it was in discussions with Packard Bell over a possible acquisition. At the time,Â it looked like Lenovo had beaten Acer, which was also interested in acquiring the company. However,Â Acer's plan to buy Gateway for $710 million, announced Monday, trumps anything Lenovo brings to the table in its negotiations with Packard Bell. In 2006, Gateway signed an agreement with John Hui, Packard Bell's largest shareholder, that gives Gateway the right of first refusal if he decides to sells PB Holding Co. SARL, the parent company of Packard Bell. What that means is that if Packard Bell wants to enter into a final agreement to be purchased, the company has to ask Gateway first, said Y.T. Du, of Citigroup Global Markets Inc., which represented Acer in the negotiations. Gateway can refuse the deal if it wants and enter into purchase talks with Packard Bell, he said. That is exactly what Gateway has done, announcing plans to exercise its right of first refusal at the same time the Acer deal was unveiled. The agreement between Hui and Gateway is rooted inÂ Gateway's 2004 acquisition of eMachines, a PC vendor that Hui founded. When Hui acquired his stake in PB Holding Co., he granted the right of first refusal to Gateway in exchange for the company waving parts of the noncompete agreement that Hui signed when eMachines was sold. Now that Gateway has entered into talks to acquire PB Holding from Hui, Acer could end up owning both Gateway and Packard Bell. While a Packard Bell acquisition would increase Acer's market share in Europe, a deal also means Acer will face having to integrate two companies with its existing operations instead of only one. "Acer is still really strong in Europe," said Bryan Ma, director of personal systems research at IDC Asia-Pacific. Ma worried that Acer's desire to acquire Packard Bell is driven more by a desire to slow Lenovo's growth in Europe, rather than a pressing need to strengthen its own position there. A Lenovo spokeswoman was not immediately available to comment. Â  With additional reporting by Dan Nystedt in Taipei. Â
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Gateway will launch a complete line of notebook PCs as one of many steps to revitalize its business after merging with Acer.
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(InfoWorld) - Acer Inc. executed a master stroke in the global war for PC market share withÂ its US$710 million purchase of Gateway Inc., but it may take a while for the market to see the light. Industry researchers view the deal as a long term positive, saying it not only strengthens Acer's ability to challenge Hewlett-Packard Co. and Dell Inc. for U.S. market share, but that it alsoÂ blocked a potent rival, Lenovo Group Ltd., from gaining ground in Europe. Even Sun-tzu, the ancient Chinese war strategist who wrote "The Art of War," could not have achieved a better move, wrote J.P. Gownder, consumer PC analyst at Forrester Research, in a report. "Acer strategists calculated several moves ahead in the global PC chess game. If the execution is solid, this deal will create a powerful third-place PC competitor that will challenge HP and Dell by 2009, and portends the rise of non-Japanese Asian PC superpowers," he wrote. But in the near term, stock market analysts and investors couldn't have disagreed more. Almost in unison, they criticized the deal as too expensive, too complex and unnecessary for Acer's growth. "The premium paid to Gateway may be too high, and the execution risk of a multiple-brand strategy is clearly the key here," said Vincent Chen, PC industry analyst at CLSA Asia-Pacific Markets in Taipei. The negative comments hurt Acer's stock. The shares fell 10.6 percent this week to end at NT$57.9 (US$1.75) Friday on the Taiwan Stock Exchange. But the view of the financial sector may be short sighted. Analysts at industry researchers such as Forrester, IDC and Current Analysis West take a longer-term perspective on the deal. Acer and Gateway may lose some market share immediately following the merger, which is normal, according to Richard Shim, an analyst at IDC. But over the long term the deal will give it the size and clout to gain market share and source components. "The opportunity for Acer in acquiring Gateway is the consumer market segment and particularly the retail channel," he wrote in a report. "The acquisition of Gateway will not necessarily position Acer to be a competitor on the level of Dell and HP but it lays the ground work for Acer to be a more significant player in the largest market in the world [the U.S.] and in the fastest growing segment of that market." Current Analysis West analyst Toni Duboise believes Acer could triple its U.S. market share with the addition of Gateway-branded desktops and notebooks, and eMachines' value PCs. The impact of the deal will take months, even years to ripple through the market, analysts say. Not only did Acer add significantly to its size,Â it also stopped Lenovo from increasing its presence in Europe. Lenovo had been in talks to buy Packard Bell BV, but by picking up Gateway, Acer was able to block the deal. Gateway held the right to refuse any deal to buy Packard Bell and make its own offer due to an older contract between the two companies. Stock market analysts argue that buying Packard Bell is a waste of time for Acer because the company is already strong in Europe. But industry researchers, and Forrester in particular, argue the move staved off a Lenovo ploy that might have hurt Acer in Europe. To be sure, merging companies isn't easy. Acer's ability to join company cultures, keep valuable workers and create product strategies that make sense will be the key to the success of the deal. The company has many recent examples to learn from, most notably HP's purchase of Compaq and the sale of IBM Corp.'s PC division to Lenovo. Rob Enderle, industry analyst at the Enderle Group, warns that Acer needs to make sure it keeps people from Gateway with experience in acquisitions, such as those who worked to make eMachines a part of Gateway after that deal. "This is also an ideal time to take a look at all of the technology both companies are using, both HP and Lenovo waited until late to get rid of a lot of the out-of-date operational technology the companies were using and that hurt both a lot. Particularly in the case of HP and the PC Company side of Lenovo, updating the core operations technology was critical to the success both firms are experiencing now," Enderle said. Time will tell if Acer can execute its merger strategy as well as its battle plan for the global PC market. Â
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Taiwanese computer firm Acer agrees to take over US PC maker Gateway and eyes the possible purchase of Packard Bell in Europe.
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Computer maker Gateway Inc. Tuesday said it has agreed to repurchase stock held by America Online Inc. for $316 million US. AOL, which is a unit of media and entertainment company Time
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The $710 million deal gives Acer a leg up in its battle with Lenovo, but important hurdles must be cleared before Gateway will turn around its lagging sales figures.
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The Gateway One is the company's seventh all-in-one PC
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Moo moos investor concerns over Gateway Computer maker Acer is looking into the possibility of a Chinese acquisition following its decision to buy US-based Gateway.â¦
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Gateway has agreed to sell a unit targeting education, medium-size businesses, and government users to MPC for $90 million, the companies said Wednesday.