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Acer-Gateway deal is valued at $710 million USD

There is big news out of the computer world today. Acer today announced that it has reached a definitive agreement to purchase U.S.-based Gateway, Inc. Gateway is currently ranked as the fourth largest PC manufacturer in the U.S. with shipments of over 20 million PCs per year.

The acquisition is estimated to be valued at $710 million USD ($1.90 per share) and is expected to be finalized in December 2007.

"This strategic transaction is an important milestone in Acer's long history" said Acer chairman J.T. Wang. "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."

"Joining with Acer will enable us to bring even more value to the consumer segments we serve and capitalize on Acer's highly regarded supply chain operations and global reach to expand the scope of the Gateway and eMachines brands around the world," remarked Gateway CEO Ed Coleman.  "Acer has made impressive strides in the global PC market and the board and I welcome this merger."

From statements made by representatives for both companies, it appears that the eMachines brand -- which Gateway acquired 2004 for roughly $262 million USD -- and Gateway brand will live on under Acer's massive wings. The retention of the brands also means that Gateway will likely continue to flaunt its "cow heritage" much like the Chick-fil-A restaurant chain.

Almost exactly one year ago, it was reported that John Hui offered $450 million USD to purchase Gateway's retail division. The bid, however, was never accepted by Gateway. "I am very disappointed that Gateway has chosen not to constructively engage in discussions with me and my advisors on the proposal that I sent to you on Aug. 3," said Hui in August, 2006. "I believe that management and the board need to adopt a sense of urgency to address Gateway's problems."

The news of Acer’s acquisition comes just weeks after Gateway’s announcement that it would enter the Chinese PC market with desktop and notebook computers.

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By 1078feba on 8/27/2007 9:47:45 AM , Rating: 1
Considering that ATI went for approx 3 times that amount?

By ajfink on 8/27/2007 10:00:03 AM , Rating: 2
Do YOU have $710M? No? Not that paltry then, I guess.

But seriously, ATI was a larger company with its hands in markets across the world.

By deeznuts on 8/27/2007 1:02:22 PM , Rating: 2
Not really. Market cap, which is a normal way to value a public company when going to purchase it, is less than $700M. Also, Gateway's book value is a paltry $261M or so.

If anything, they are overpaying lol.

A buddy of mine who I went to law school with is/was an attorney at Gateway, even before they merged with e-machines. I was jealous of him because he got a job with "Gateway" way back when. That envy didn't last long is all I can say, Gateway went down fast.

By Dactyl on 8/27/2007 1:26:01 PM , Rating: 2
ATi actually developed new technologies, designed hardware, and wrote software, including optimized drivers, which is just about the most difficult type of software to write (it's up there with optimizing compilers).

Gateway just assembled computers. The parts Gateway used were often expensive. CPUs, motherboards, HDDs, graphics cards, monitors, RAM--all of those can be expensive. But that doesn't mean Gateway as a company is worth tons of money. Expensive parts come in --> expensive parts go out. That doesn't mean the company is worth lots of money.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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