Acer's Purchase of Gateway Makes it World's Third Largest PC Company

Acer Inc. and Gateway Inc. have reached a definitive agreement in which Acer will acquire Gateway, the world fourth largest PC company. Acer is also one of the world's leading branded PC vendors, and together the acquisition will create a company with more than $15 billion in revenue and sales of over 20 million PCs per year.

Acer will initiate a cash offer to purchase Gateway's outstanding shares, the total value of which is approximately $710 million. Both company's boards have unanimously approved the deal, which is now subject to standard closing conditions and satisfying various laws outside of the U.S. Closure of the acquisition is expected by December 2007. Gateway is also discussing the sales of its U.S. based Professional business with a third party.

In the press release provided by Gateway Monday morning, chairman of Acer J.T. Wang says "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."

The president of Acer, Gianfranco Lanci, also noted that the two companies' geographical presences are highly complementary. With Gateway's unique and powerful brand the company will have an opportunity to cover all major market segments. Acer is looking forward to implementing a multi-brand strategy to address different consumer segments. He also adds that Gateway's employees will by vital to their collective success.

Both companies share a focus on the consumer market, with Acer having a global reach and excellent reputation for supply chain operations. The acquisition gives the Gateway brand has the opportunity to reach around the world. The combination gives a substantial boost in scale to their operations. Lower component costs and a reduction in per unit procurement are expected to come out of their joined resources.