The Taiwan firm has said for months it was in acquisition talks. Acer will commence a cash tender offer to purchase all the outstanding shares of Gateway for US$1.90 per share, which represents a total equity value consideration of approximately US$710 million.
Acer will pay $1.90 a share for Irvine, California-based Gateway, according to a statement today from the Taipei-based company. The price represents a 57 percent premium over Gateway’s closing price of $1.21 on Aug. 24.
The deal is expected to be completed by December, and the merged company would still be a distant third in the U.S. behind market leader Dell (DELL.O: Quote, Profile, Research), at 28.4 percent, and Hewlett-Packard (HPQ.N: Quote, Profile, Research), at 23.6 percent, according to IDC.
“Acer’s fumbled around a bit in the U.S., so this will definitely help in that regard,” said IDC analyst Bryan Ma.
The acquisition will include Packard Bell’s European operations as Gateway intends to exercise its right of first refusal to acquire Packard Bell in Europe, Acer Chairman J.T. Wang said in a letter to employees, a copy of which was obtained by Bloomberg.
On a worldwide basis, the deal pushes Acer — Taiwan’s most recognised global brand — up to third ahead of Chinese rival Lenovo (0992.HK: Quote, Profile, Research), which confirmed this month it was in talks to buy PC maker Packard Bell.
But officials from Acer and Citigroup (C.N: Quote, Profile, Research), which advised on the deal, said Gateway had first rights to acquire Packard Bell, and that the pair had begun talks about such a deal that could eventually see them both folded into Acer.
A merged Acer and Gateway would have sold about 18.6 million PCs worldwide last year, or about 8 percent of global sales, compared to Dell’s 39.1 million units, Hewlett-Packard’s 38.8 million and Lenovo’s 16.6 million, according to IDC.
Gianfranco Lanci, president of Acer, indicated that both Acer’s and Gateway’s geographical presence and product positioning are highly complementary and that the company believes the combined scale will lead to significant efficiencies. The combination of Acer and Gateway is expected to result in significant revenue and cost synergies, with the pre-tax synergies expected to be at least US$150 million, the company stated.