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Acer to acquire Gateway for $710 million

post #1 of 34
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In a bid to form the third largest computer company in the world, Taiwan-based Acer Inc. announced Monday that it has entered into a definitive agreement to acquire PC maker Gateway, Inc. in a share buyout worth approximately $710 million.

The acquisition, which is expected to close by December, will create a multi-branded PC-company with over US$15 billion in revenues and shipments in excess of 20 million PC units per year.

Under the terms of the agreement, Acer will commence a cash tender offer to purchase all the outstanding shares of Gateway for $1.90 per share, which represents total equity value consideration of approximately $710 million. The acquisition has been unanimously approved by the boards of directors of both Gateway and Acer and is subject to standard closing conditions, including approval under Hart Scott Rodino, Exon Florio and similar laws outside the U.S.

"This strategic transaction is an important milestone in Acer's long history," said J.T. Wang, Chairman of Acer. "The acquisition of Gateway and its strong brand immediately completes Acer's global footprint, by strengthening our US presence. This will be an excellent addition to Acer's already strong positions in Europe and Asia. Upon acquiring Gateway, we will further solidify our position as number three PC vendor globally."

Once completed, the deal will push the combined company's US-based PC market share to over 10 percent, or nearly twice that of Cupertino-based Apple Inc. The combination of Acer and Gateway is also expected to result in significant revenue and cost synergies, the two companies said. This considerable increase in scale should result in reductions in per unit procurement and component costs for both companies, translating into significant cost savings through the increased efficiency of the combined back-office functions.

Gateway, which had previously announced its intentions to purchase all controlling shares of European PC vendor Packard Bell BV, also revealed Monday that it is in discussions with a third party with regards to a sale of its U.S. based Professional business.
post #2 of 34
Interesting how a company that has a higher marketshare (in the US, mind) can be bought by some 6-7% of Apple's war chest.

/Adrian
post #3 of 34
Gateway is worth $710 million? I would have never thought they were worth that much. Glad I don't work for them anymore.
post #4 of 34
Quote:
Originally Posted by AppleInsider View Post

"The acquisition of Gateway and its strong brand immediately completes Acer's global footprint, by strengthening our US presence... we will further solidify our position as number three PC vendor globally."

Okay, Gateway's strong brand? I know they've been around for a while here, but ever since their stores started shutting down - I've seen very little from them, in fact I wasn't even sure they were around anymore. I'm not sure I would classify their brand as strong.

And as for the second part of that quote - I had to laugh. That's a good position to solidify - number 3!

I realize that's a big deal in a global market, but it still sounds funny.
post #5 of 34
Quote:
Originally Posted by Zandros View Post

Interesting how a company that has a higher marketshare (in the US, mind) can be bought by some 6-7% of Apple's war chest.

/Adrian

Yeah, that struck me too. A notionally more successful PC maker actually has a market cap that's a small fraction of Apple's.
post #6 of 34
They have a strong brand -- cow spots on their shipping boxes and empty spaces in strip malls where you can just make out the words "Gateway Country" on the sunbleached bricks above. How much stronger can you get?
post #7 of 34
Gateway? Yeah... they're HUGE!!! I think they have a Kiosk at one of the local malls out here in Seattle. Their computers are always on sale on QVC too. Look out for a great deal!

With a marriage between ACER and GATEWAY, it kind of makes you wonder who's name you take.
post #8 of 34
Hm, according to IDG, Lenovo did just recently bid the same amount for Gateway. Trying to protect their aquisition of Packard Bell?

/Adrian
post #9 of 34
Quote:
Originally Posted by bdkennedy1 View Post

Gateway is worth $710 million? I would have never thought they were worth that much. Glad I don't work for them anymore.

They are and they aren't. Gateway has a small but useful patent portfolio...like the 2 button mouse if that hasn't run out yet. Between that, branding and current sales revenue and the ability to instantly catapult to #3 past China's Lenovo has certain appeal. With the Packard Bell name (was that finalized?) then they have solid brands in Asia, Europe and the US.

Heh..."synergy"...also known as firing all Gateway staff except for marketing and logistics...
post #10 of 34
I knew they were finished when their CEO started dating a cow a couple years back. What a loser. Those TV ads were pathetic.

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post #11 of 34
Quote:
Originally Posted by vinea View Post

With the Packard Bell name (was that finalized?) then they have solid brands in Asia, Europe and the US.

LOL...Lenovo just got shafted. Gateway exercised first right of refusal on the Packard Bell to trump Lenovo's offer...

Seems Acer is a better strategic thinker than Lenovo.
post #12 of 34
Maybe Gateway didn't want what was left of their computers being chock full of lead. You know, because the Chinese put lead in everything. Zing!
post #13 of 34
All their machinations are futile... Apple will beat them all in the end.
post #14 of 34
Having been bitten by cheap-brand PCs before--which failed constantly both during AND after warranty due to cheap parts with horrible service--I can only shudder to imagine Acer, Gateway and eMachines now under one roof!

(I don't know if Packard Bell fits in the same cheap category or not.)
post #15 of 34
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post #16 of 34
With the margins being so thin on run of the mill PCs, this doesn't surprise me. The only companies able to make a profit on computers will be Chinese-owned and/or manufactured... and Apple.

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post #17 of 34
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Originally Posted by SpamSandwich View Post

With the margins being so thin on run of the mill PCs, this doesn't surprise me. The only companies able to make a profit on computers will be Chinese-owned and/or manufactured... and Apple.

Well, all of the Macintosh computers I've owned recently (MacBook, iMac, etc) were designed in California and then manufactured in China. So from my perspective the "... and Apple" bit is a little redundant, isn't it?
post #18 of 34
Quote:
Originally Posted by lfmorrison View Post

Well, all of the Macintosh computers I've owned recently (MacBook, iMac, etc) were designed in California and then manufactured in China. So from my perspective the "... and Apple" bit is a little redundant, isn't it?

Apple is not Chinese owned... yet.

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post #19 of 34
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post #20 of 34
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Originally Posted by city View Post

When Acer starts making cars, I am leaving the planet.

They may already be in that segment of the market... Chinese companies I've dealt with are usually so interwoven in their business interests, they are like one ginormous shell-game.

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post #21 of 34
AceWay - sounding cheaper by the minute
OMG here we go again...
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OMG here we go again...
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post #22 of 34
Quote:
Originally Posted by SpamSandwich View Post

Apple is not Chinese owned... yet.

Acer is a Taiwanese company.
post #23 of 34
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Originally Posted by frawgz View Post

Acer is a Taiwanese company.

Oops... er, that's an important distinction. \ Never mind.

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post #24 of 34
Quote:
Originally Posted by nagromme View Post

Having been bitten by cheap-brand PCs before--which failed constantly both during AND after warranty due to cheap parts with horrible service--I can only shudder to imagine Acer, Gateway and eMachines now under one roof!

(I don't know if Packard Bell fits in the same cheap category or not.)


Not to mention they don't even have an OS for all that hardware junk. Imagine owning all of that and depending on Microsoft! ... shudder!
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Enjoying the new Mac Pro ... it's smokin'
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post #25 of 34
Quote:
Originally Posted by frawgz View Post

Acer is a Taiwanese company.

Yes, but the PRC will fix that eventually...and officially, under the One China Policy, the fiction is that it already is one country...
post #26 of 34
Quote:
Originally Posted by nagromme View Post

Having been bitten by cheap-brand PCs before--which failed constantly both during AND after warranty due to cheap parts with horrible service--I can only shudder to imagine Acer, Gateway and eMachines now under one roof!

(I don't know if Packard Bell fits in the same cheap category or not.)

When Packard Bell was in the US, I think it was as bad or worse.
post #27 of 34
Quote:
Originally Posted by vinea View Post

Yes, but the PRC will fix that eventually...and officially, under the One China Policy, the fiction is that it already is one country...

Does anyone in the US government really even give a damn about that policy? It's the emptiest policy I've heard of in quite some time. It may as well be a unicorn breeding policy as far as I can tell.
post #28 of 34
Quote:
Originally Posted by JeffDM View Post

Does anyone in the US government really even give a damn about that policy? It's the emptiest policy I've heard of in quite some time. It may as well be a unicorn breeding policy as far as I can tell.

Given that it is a requirement to maintain official relations with China I guess someone in Washington must care...but we're straying a bit off topic. My bad.

That said, here's another digression somewhat related to unicorn breeding policies and China: China has banned reincarnation without prior government permission (presumably in triplicate).

http://www.msnbc.msn.com/id/20227400/site/newsweek/

Vinea
post #29 of 34
On topic...this keeps Apple at bay from taking the #3 slot in the US but will it help Apple take #5 world wide? I was unable to tell where Gateway ranked worldwide but if its ahead of Apple that would help.
post #30 of 34
One PC maker buys another. Just think of all that intellectual property acquired for 710m
post #31 of 34
Quote:
Originally Posted by grayum View Post

One PC maker buys another. Just think of all that intellectual property acquired for 710m

yeah... you can buy the cow-machine company for $710 and combine it with the cheap-POS-machine company to get:







Cowpie Computing.
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post #32 of 34
First IBM/Lenovo, now Gateway/Acer. Dell can't be too far behind. Good thing HP has a solid printer division that keeps things going, at least for now (even there, one should not be surprised if that ends up on the chopping block some day, as did IBM's PC division).

Ah..... sad, but predictable, what the quest for cheapness in PCs has wrought.

Something for all the anti-Apple pro-PC-pro-MSFT-yahoos to think about.

\
post #33 of 34
Why all the fuss over Packard Bell? Both Acer and their rival Lenovo are gunning for them (acquiring Gateway is merely a strategic move for PB on Acers' part), but I honestly don't know what is so good about them. Shortly after acquiring one, I found out that their machinery is in fact pretty bad. Not quite Time/Tiny bad, but still pretty prone. Maybe they have good marketshare...I have no clue
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post #34 of 34
Quote:
Originally Posted by Michael528 View Post

Why all the fuss over Packard Bell?

European branding. Lenovo has limited presence. The Acer move was defensive to keep Lenovo at bay since they already have decent presence in Europe.
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