Acer set to pay $710m for Gateway

Acer of Taiwan agreed to buy Gateway of the US for $710 million (€520 million) yesterday

Acer of Taiwan agreed to buy Gateway of the US for $710 million (€520 million) yesterday. The deal would put it ahead of Lenovo, its Chinese rival, as the world's third-largest personal computer maker.

The transaction, approved by the boards of both companies, will strengthen Acer's position in the US. It will also give it control of Packard Bell in Europe, a PC vendor, only weeks after Lenovo announced that it was in exclusive talks to acquire the company.

"The company that loses the most from this is Lenovo," said JP Gownder, a PC analyst at Forrester Research. "Acer is saying [ it's] going to be a world player. That is a huge stake in the ground."

Gateway's shares surged nearly 50 per cent to $1.80 on news of the proposed deal, which valued the company at $1.90 a share - a 57 per cent premium to Friday's closing price for Gateway shares.

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Acer was able to snatch Packard Bell out of Lenovo's hands because Gateway has a say over any sale of the PC vendor under a contract with John Hui, a big shareholder in both companies.

Gateway's shares had fallen 80 per cent since 2004.