Acer to acquire Gateway for $710 million
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.
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.
Comments
/Adrian
"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."
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.
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.
With a marriage between ACER and GATEWAY, it kind of makes you wonder who's name you take.
/Adrian
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...
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.
(I don't know if Packard Bell fits in the same cheap category or not.)
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?
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.
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.