Gateway Inc. has agreed to buy Packard Bell B.V., snatching the company from China's Lenovo Group Ltd., which had also expressed interest in buying the Paris-based PC seller. The deal will be funded by Taiwanese computer maker Acer Inc., which has agreed to acquire Gateway for $710M. Financial terms were not disclosed, but the cost was estimated at less than $100M by a source close to Acer, who also claimed that the agreement aimed to prevent a bidding war by not allowing for a renewed bid should Lenovo present a rival offer. According to research firm Gartner, Acer and Gateway will have a combined 8.8% of the PC market, and Lenovo 7.9%, behind global market leaders Hewlett-Packard and Dell. The deal will be accomplished through the purchase of Packard Bell's parent, PB Holding Co., from Lap Shun (John) Hui, who controls 75% of PB Holding, and Clifford Holdings Ltd., which is controlled by Hui. Gateway, in August, said it would exercise a right of first refusal to buy Hui's indirect stake in Packard Bell. The acquisition is expected to close by the first quarter of 2008, subject to regulatory approvals.
Sources: Press release, Financial Times, Reuters, Bloomberg
Commentary: Acer Sees Opening As Dell's Trouble's Deepen • Battle of the Agressive Chinese Computer Brand Buyers
Stocks/ETFs to watch: GTW, OTCPK:LNVGY. Competitors: DELL, HPQ, AAPL. ETFs: XLK, IGM, IYW
Earnings call transcript: Gateway Inc. Q2 2007
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.