Los Angeles – Taiwan-based Acer Inc. will acquire Gateway for $710 million in a deal designed to give the long-struggling U.S. computer maker the size it needs to compete against larger players, the companies announced Monday.
The deal will push the combined company past China’s Lenovo to become the world’s third-largest vendor of personal computers, behind Hewlett- Packard and Dell.
With the acquisition, Acer will absorb a company that made a splash when it was founded in 1985 in an Iowa farmhouse.
Gateway’s made-to-order philosophy for selling computers made it a formidable player early on, and the brand became known for the cow-spotted boxes used to ship its products.
Now based in Irvine, Calif., Gateway struggled in recent years amid fierce competition.
It branched out into consumer electronics – selling televisions, music players and other items – but the strategy didn’t work.
Neither did its retail stores, which shuttered in 2004.
Acer said it was offering to buy Gateway for $1.90 a share – representing a premium of 57 percent over Gateway’s Friday closing price of $1.21. Gateway shares climbed 61 cents, or about 50 percent, to $1.82 Monday.
Acer estimated that acquiring Gateway would create operating savings of more than $150 million a year and immediately add to its earnings.
Gateway said it is in talks to sell its professional business, which markets computers to business customers, and is exercising its right to purchase the remaining shares of the parent company of Packard Bell BV, a European PC vendor based in France.
