Lawsuits Threaten Acer-Gateway Deal

Gateway investors claim the $710 million price is too low for the computer maker.

A pair of investor lawsuits is muddying the water around Acers proposed buyout of rival PC maker Gateway, according to the latest amendments to the deal filed with the federal Securities and Exchange Commission.

According to the amended SEC filings submitted by Gateway officials in the last two days, the suits take issue with the $710 million sale price for Gateway, a company once valued in the billions before a downturn in technology in general—and manufacturers in particular—sapped the Irvine, Calif. companys value.

In a class action suit filed Aug. 31, four days after the Acer deal was made public, stockholders in Orange County, Calif., termed the sale price "inadequate and unfair" and allege that Gateways directors "breached their fiduciary duties to stockholders by approving the Merger Agreement."

The lawsuit names Gateway, each of the companys directors and 25 unspecified "Does" as defendants.

That suit was followed with a similar legal action Sept. 7, filed by stockholders in Delaware. That case, Cin v. Clarke, et al., names the same defendants in a complaint alleging breach of fiduciary duty. The lawsuit calls the Acer-Gateway deal "unfair and coercive to the public stockholders," and alleges that company directors failed to include complete information in reports to investors that prevented "a fully informed, voluntary choice whether to approve the merger agreement or seek appraisal."

Neither Gateway nor Acer officials responded to requests for comment.


Click here to read more about more hurdles for the Acer-Gateway deal.

The suit could threaten the pairs effort to create the worlds third-largest PC vendor. The acquisition, announced Aug. 27, calls for Taiwan-based Acer to pay $710 million for Gateway, or about $1.90 a share. The combined revenue of the two companies is expected to top more than $15 billion, and their combined shipments would top 20 million desktops and laptops annually. The deal is expected to close in December.


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