PC manufacturer Acer announced on Monday that it has entered into an agreement to purchase rival computer maker Gateway. Acer will purchase Gateway for US$1.90 a share, or about $710 million.
Gateway purchased low-end PC maker eMachines several years ago, which means Acer will now own that brand, too. Acer plans to use Gateway to strengthen its position in the U.S. PC market.
eMachines gained notoriety early on for selling sub-$600 computers in the late 1990is when rival PC makers offered systems starting just below $999. The companyis below market prices spurred a price war that proved devastating for its competitors including HP, IBM, and Packard Bell.
The PC name roulette doesnit stop with Aceris purchase. Gateway will be exercising a first right of refusal to purchase all the shares of PB Holding Company, which is the parent company of the European PC maker Packard Bell BV. Gateway is also in negotiations to sell off its U.S.-based Professional business.
The Acer and Gateway deal is expected to be completed by December 2007.