Acer Inc. plans to acquire Gateway Inc

Acer Inc. plans to acquire Gateway Inc. in a deal worth $710 million that Acer says will make it the world's third-largest PC vendor.

Under terms of the agreement announced Monday, Acer will purchase all of Gateway's outstanding shares for $1.90 per share. The deal has already been approved by the boards of directors at both companies and should be completed by the end of this year, subject to government approval, Acer said in a statement. Gateway's shares ended at $1.21 Friday on the New York Stock Exchange.

"This is the biggest acquisition in Acer's 30 year history," said J.T. Wang, Acer's chairman, speaking at a news conference in Taipei.

"After this acquisition, we are solidly number three in the global PC market," Wang said.

Acer's acquisition deal with Gateway also derails rival Lenovo Group Ltd.'s plans to acquire Packard Bell BV.

Alongside the acquisition deal with Acer, Gateway unveiled plans to exercise its right of first refusal to acquire shares in Packard Bell's parent company, PB Holding Co. SARL, from John Hui. Hui is the founder of eMachines Inc., which Gateway acquired in 2004, and the largest shareholder in Packard Bell.

Gateway did not disclose how much it has offered for Hui's stake in PB Holding.

Acer's efforts to overtake Lenovo will get a big boost from Gateway, which was the world's eighth largest PC vendor during 2006. Together Acer and Gateway shipped 18.6 million PCs during 2006, compared to 16.6 million PCs shipped by Lenovo.

The Gateway acquisition will have the greatest impact in the U.S., where Acer has been growing fast but remains in sixth place among PC vendors.

"This is definitely a good play for them from the U.S. consumer perspective," said Bryan Ma, director of personal systems research at IDC Asia-Pacific. However, the big question is how Acer plans to integrate Gateway with its own operations, and how smoothly the integration process will go, he said.

Acer's share of the U.S. PC market grew 164 percent during the second quarter of 2007, compared to the same period last year. Acer shipped 888,000 PCs to U.S. customers, giving the company a 5.2 percent share of the market.

By comparison, Gateway was the fourth-largest PC vendor during the second quarter, shipping 965,000 PC and taking 5.6 percent share of the U.S. PC market. The Gateway acquisition vaults Acer into the number three spot in the U.S. PC market, behind only HP and Dell.

"Acer is an outstanding strategic partner for Gateway," said Ed Coleman, CEO of Gateway, in a video feed at the Taipei news conference to announce the deal.

Gateway reported net income of $1.9 million for the second quarter, compared to a loss of $7.7 million one year earlier. The company said gains in its retail division during the period were offset by declining revenue in its professional and direct divisions.

However, talks are currently underway to sell off the professional division to a third party, Gateway said Monday. The company did not offer details of those discussions.

Gateway (telecommunications)

In telecommunications, the term gateway has the following meanings:

In a communications network, a network node equipped for interfacing with another network that uses different protocols.
A gateway may contain devices such as protocol translators, impedance matching devices, rate converters, fault isolators, or signal translators as necessary to provide system interoperability. It also requires the establishment of mutually acceptable administrative procedures between the two networks.
A protocol translation/mapping gateway interconnects networks with different network protocol technologies by performing the required protocol conversions.
Loosely, a computer is configured to perform the tasks of a gateway. For a specific case, see default gateway.
Routers exemplify special cases of gateways.

Gateways, also called protocol converters, can operate at any layer of the OSI model. The job of a gateway is much more complex than that of a router or switch. Typically, a gateway must convert one protocol stack into another.

Examples

A gateway may connect an AppleTalk network to nodes on a DECnet network
A very popular example is connecting a Local Area Network or Wireless LAN to the Internet or other Wide Area Network. In this case the gateway connects an IPX/SPX (the LAN) to a TCP/IP network (the Internet).
MainWay is the Bull brand for a gateway which connects DSA to TCP/IP

Connecting IP Networks

Gateways that connect two IP-based networks, have two IP addresses, one on each network. A gateway address like 192.168.1.1 is a Private address, and is the address to which traffic is sent from the LAN. The other IP address is the Wide Area Network address, this is the address to which traffic is sent coming from the WAN. When this is the Internet, that address is usually assigned by an ISP.

When talking about the gateway IP address, commonly the LAN-address of the gateway is meant.

If private addressing is used then the addresses of computers connected to the LAN are hidden behind the WAN gateway. That is, remote computers located "out there" on the WAN can only communicate with LAN stations via the gateway's WAN IP address. To regulate traffic between the WAN and the LAN, the gateway commonly performs Network Address Translation (NAT), presenting all of the LAN traffic to the WAN as coming from the gateway's WAN IP address and doing packet sorting and distribution of return WAN traffic to the local network

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