Gateway Sells Pro Unit To System Builder MPC

The Irvine, Calif.-based Gateway, which last week said it would exercise its right to buy Europe's Packard Bell and then agreed to be purchased by rival Acer, will sell its $900 million Professional unit to MPC for about $90 million worth of stock, debt assumption and a promissory note, MPC said in a statement. The deal was announced shortly after 12:30 a.m. Eastern Time.

In selling its professional business to MPC, Gateway is turning over one of the more successful pieces of its business prior to completion of the Acer deal. The professional unit was also where Gateway partnered most often with resellers and solution providers in the channel, after the company abandoned its direct-only business model after the dot-com downturn. The unit accounted for about $75 million worth of what Gateway labeled "margin" over the past four quarters, although the company has stopped short of calling it profitable.

MPC's acquisition of that unit from Gateway will immediately turn the Nampa, Idaho-based company into a more sizable player in the commercial PC and server segment.

"Similar to MPC's business, Gateway's Professional business targets customers in education, medium-sized business, and government with customized solutions including PCs, peripherals and services," MPC said in a press release. "This acquisition would provide MPC with the customers, products and employees to compete at a larger scale in the PC industry. The combined revenue of MPC and Gateway's Professional business in 2006 would have been $1.2 billion." MPC's sales for its most recent fiscal year came in at $260 million.

In Gateway's own, separate statement, Gateway CEO Ed Coleman said that while the professional business has shown growth, its divestiture would allow the company to focus on its largest business segment -- the consumer space.

In its statement, Gateway said that "a significant portion of Gateway's Professional employees will join MPC and continue to work out of the North Sioux City, SD facility. MPC will assume Gateway's ownership in its final assembly facility (GCC) located in Nashville, Tenn., and will take full responsibility for this facility, including the assembly of Gateway Professional products produced there. MPC will also acquire the portion of Gateway's Consumer Direct unit that targets businesses with less than 100 employees."

Neither MPC nor Gateway had any initial indication of how Gateway's channel organization would be structured after the deal is completed.

Last week, Gateway agreed to be acquired by Acer for $710 million.