Taiwanese vendor overtakes Chinese rival to become world's third largest PC manufacturer

Acer buys Gateway

Taiwanese vendor Acer has purchased US manufacturer Gateway in a deal said to be worth $710 million (£355 million), or $1.95 a share and is expected to save the combined company at least $150 million (£75 million) a year.

The deal sees Acer leapfrog its Chinese rival Lenovo, into third place with combined shipments of 20 million PCs and sales of $15 billion ($7.5 billion) and is widely perceived as a move to block its competitor from purchasing the France-based vendor Packard Bell.

Gateway itself had previously attempted to purchase Packard Bell and currently holds a Right to First Refusal – a deal inked between it and Packard Bell owner John Hui. Acer has stated in the press release that it intends to exercise Gateway’s right, however, it is unclear if it is a threat to other vendors who may be interested in attempting to acquire Packard Bell or if Acer is implying that it is already in negotiations to purchase the company.

The move also strengthens the company’s US position with the combined vendor now accounting for 10.8 per cent of the US market. HP, the second largest vendor in the US in contrast has a market share of 23.6 per cent.

"This strategic transaction is an important milestone in Acer’s long history" said J.T. Wang, chairman of Acer in a shared statement to the press. "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."

Explaining the reasons behind the purchase, Gianfranco Lanci, president of Acer, added, "Both Acer’s and Gateway’s geographical presences and product positioning are highly complementary. We believe that our combined scale will lead to significant efficiencies."

Acer announced that it would not merge the two brands but keep them as distinct entities. "Gateway has built one of the industry’s most powerful and unique brands and with this acquisition, we will have the opportunity to implement an effective multi-brand strategy and cover all the major market segments," added Lanci.

"In time, we intend to actively manage our brand portfolio and differentiate our brands to address different consumer segments. We are also acquiring a world-class team and Gateway’s employees will be critical to our combined success."

"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," said Gateway CEO, Ed Coleman. "Acer has made impressive strides in the global PC market and the board and I welcome this merger."

The deal is expected to be completed by December 2007.

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