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Acer Buys Gateway for $710 Million

Acer Buys Gateway for $710 Million

The game of one-upsmanship in the OEM PC market took another dramatic step today, as Taiwanese computer maker Acer announced it has reached a definitive agreement to acquire U.S. computer maker Gateway for $710 million. Acer is currently the third largest PC maker on the planet, locked in a tight competition with China’s Lenovo. As a combined company, Acer and Gateway would be in a position to ship over 20 million PCs a year and generate over $15 billion in revenue, which would provide a solid lock on the number three position.

"This strategic transaction is an important milestone in Acer’s long history" said Acer Chairman J.T. Wang, in a statement. "The acquisition of Gateway and its strong brand immediately completes Acer’s global footprint, by strengthening our U.S. 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."

Hewlett-Packard is currently the world’s top PC maker; U.S.-based Dell occupies the number two slot, despite a recent significant decline in sales.

The Acer/Gateway acquisition also seems to represent a wily move in Acer’s long-time competition with China’s Lenovo, in that it looks like it will enable Acer to scuttle Lenovo’s recently announced plans to acquire Packard Bell. The key to that move is eMachines’ founder John Hui, who owns five percent of Gateway due to Gateway’s acquisition of eMachines in 2004. In 2006, Hui acquired Packard Bell and signed an agreement with Gateway that gave the U.S. computer maker right of first refusal if he decided to sell Packard’s Bell’s parent company. That means Packard Bell can only be purchased if Gateway gives its approval—and this morning, Gateway announced it would exercise that right to block Lenovo’s planned purchase of Packard Bell.

The upshot is that for $710 million dollars, Acer has not only acquired Gateway, it has foiled Lenovo’s acquisition of Packard Bell and its plans to expand its presence in the European market—and very likely opened the door to its own acquisition of Packard Bell, further solidifying its presence in the world PC market.

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