TAIPEI -(Dow Jones)- Taiwan's Acer Inc. (2353.TW), the world's fourth-largest computer maker by shipments said Monday it agreed to buy Irvine, Calif.-based computer maker Gateway Inc. (GTW) for US$710 million in a deal that is expected to shore up the Taiwanese company's weak presence in the U.S. market.
Acer is offering to buy Gateway shares for US$1.90 each, a premium of 57% to Gateway's Friday closing price of US$1.21 each.
The companies said in a joint statement Monday they expect the acquisition to close by December pending regulatory approval in Taiwan and the U.S.
The two companies will have combined revenue of more than US$15 billion and PC shipments of over 20 million units a year, they said.
"Both Acer's and Gateway's geographical presences and product positioning are highly complementary," said Acer President Gianfranco Lanci in the statement. " We believe that our combined scale will lead to significant efficiencies."
The two companies said they expect "significant" revenue and cost savings after the merger because it will result in a reduction in component costs for both companies.
The potential cost savings will be more than US$150 million, Acer and Gateway said in their statement.
Bryan Ma, an analyst at U.S. market research firm IDC said, Acer's acquisition of Gateway is expected help the Taiwan company's relatively weak presence in the U.S. market.
"Acer ranked sixth in the U.S. market, while Gateway ranked third as of the second quarter. Combined, they are expected to double their shipments," he said.
Citigroup Inc. is the financial advisor for Acer, while Goldman Sachs Group Inc. is acting as the financial advisor for Gateway.
-By Wei Yi Lim and Joy C. Shaw, Dow Jones Newswires; (8862) 2502-2557; firstname.lastname@example.org