Archive for August, 2007

Disgruntled investors aim to derail Acer-Gateway deal

Monday, August 27th, 2007
Some investors aren’t so excited about Acer’s acquisition of Gateway, as evidenced by a pair of lawsuits filed since the deal was announced late last month. Both of the lawsuits seek to keep the merger from going forward, saying that Gateway could have been sold for more than the $710 million Acer will be paying.Both lawsuits have been filed in state court: one in California, where Gateway is headquartered, and one in Delaware, where it is incorporated. The lawsuits were revealed in a pair of SEC filings made late last week by the company. In both lawsuits, Gateway is accused of breaching its fiduciary duties to stockholders by selling to Acer. “The lawsuit alleges, among other things, that the Company’s directors breached their fiduciary duties to stockholders by approving the Merger Agreement and the transactions contemplated thereby, including but not limited to the Offer, and claims that these transactions are both unfair and coercive to the public stockholders in a sale of the Company,” according to one of the filings.Acer is buying Gateway in order to gain a greater foothold in the US market. Although Gateway has struggled for the past several years, giving up on its retail stores, it’s still the number three PC maker in the US in terms of market share. Its 2004 acquisition of budget PC manufacturer eMachines has also helped Gateway stay afloat in the sea of commodity boxes.Gateway also has first dibs on buying privately-held Packard Bell. Although some Americans who owned Packard Bells in the late 1990s are probably still in therapy over the experience, the company has evolved into a relatively well-respected brand in Europe. Lenovo had previously indicated its interest in snapping up Packard Bell in order to build its presence on the continent, a desire that will apparently go unfulfilled.

Gateway may have been able to hold out for a slightly higher price, but with its market share already under pressure from the likes of Apple, Toshiba, and Lenovo, being acquired by another player such as Acer may prove to offer its best chance not only to survive, but also to thrive.