Acer Closes Gateway Deal

Taipei, Taiwan-based Acer said Tuesday it has closed out its $710 million acquisition of the once high-flying direct PC maker Gateway.

In a statement, Acer said it had acquired 86.09 percent of all outstanding shares of Gateway, via its Galaxy Acquisition Corp. The deal had originally been announced in August; since then Gateway announced it would exercise an option to buy the Paris-based PC maker Packard Bell, and it sold its professional business to Nampa, Idaho-based system builder MPC Corp.

"We welcome (Gateway CEO) Ed Coleman and the talented team at Gateway, into the Acer family, and we are delighted by the enthusiasm with which Gateway employees and clients have reacted to joining our group," Acer Chairman and CEO J.T. Wang said in a statement. "Our enhanced global footprint and leading multi-branded strategy will be extremely valuable for our customers and will drive growth for the combined company in the years ahead."

The move punctuates 18 months of hyper-growth for Acer, during which it has taken share away from rivals including Dell and Lenovo through a combination of aggressive pricing, logistics and channel incentives. It also caps the steady -- and, at times shocking -- decline of Gateway. Founded in Sioux City, Iowa by the pony-tailed Ted Waitt in 1985, Gateway grew into a Tier 1 PC maker with a model that, like rival Dell, focused on direct sales and competition with the reseller channel. However, as the dot-com expansion began to collapse, Gateway's business model slowed down and several executives (not Waitt) became caught up in accounting irregularities that prompted legal action by the U.S. Securities and Exchange Commission.

A combination with retail PC maker eMachines, as well as a controlled launch into the commercial reseller channel, failed to bring Gateway back to its glory days and, by last year, investors began calling for changes.

Acer said it is planning to simply merge Gateway into its company as a wholly-owned subsidiary.

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