Acer to acquire Gateway for $710 million

Posted on Monday, Aug 27 2007 @ 14:11 CEST by Thomas De Maesschalck
Earlier today I wrote about a potential Chinese buyer of U.S.-based HDD maker Seagate and now I came across a report that Acer has bought Gateway for $1.90 per share, or about $710 million.

Both Gateway's and Acer's board of directors have approved the acquisition which is expected to close by December 2007.
The combination 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, Acer stated in a press release. According to Gateway's 2006 annual report, it was the third largest PC vendor in the US in 2006, and Top-10 vendor worldwide with net sales of US$3.98 billion for the year.

JT Wang, chairman of Acer, stated that the acquisition of Gateway and its strong brand immediately completes Acer's global footprint, by strengthening its US presence, and should solidify the company's position as the number three PC vendor globally. Acer intends to build a multi-brand strategy and cover all the major market segments through the acquisition. Gateway offers its PCs under two brand names, Gateway and eMachines, with eMachines systems being offered at lower price points.

Although Gateway has direct sales and uses the retail channel, the company stated in its 2006 annual report that the retail segment has been its largest segment. Gateway and eMachines products are sold in more than 7,000 retail locations in the US and Canada. Gateway sells products directly to major retailers such as Best Buy, Circuit City, and CompUSA, with sales to Best Buy representing 39% of its net sales in 2006.

The merging of the two companies would give Acer a 10.8% share of the US PC market, based on IDC data for US PC shipments for the second quarter of 2007. Gateway was the third ranked vendor in the US market in the second quarter of this year, while Acer was ranked sixth, the IDC data indicated.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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