Acer Closes Packard Bell Purchase, Lays Off Gateway Workers

Acer acquired Gateway, Inc., Irvine, Calif., in August for $710 million.

The Gateway deal was strongly motivated by Acer's move to cut off one of its top competitors, China-based Lenovo, from acquiring Europe-based Packard Bell BV. Gateway, through previous agreements with Packard Bell, had the first right to acquire Packard Bell. By acquiring Gateway, Acer was able to thwart Lenovo, which had publically said it was interested in acquiring Packard Bell.

At the time of the acquisition, Gateway said it planned to exercise its right of first refusal to acquire all the shares of PB Holding Company, the parent company for Packard Bell.

The acquisition of Gateway and Packard Bell let Acer leap over Lenovo to grab the number three position in the desktop PC market, after Hewlett-Packard Co., Palo Alto, Calif. and Dell, Round Rock, Texas.

Sources at Acer America and Gateway also confirmed reports that the company has laid off about 140 people working in a variety of support functions. About 75 percent of the layoffs happened in North Sioux City, S.D., the company's headquarters until 1998. The rest of the layoffs were done in the company's Irvine, Calif. headquarters.

Some of the Gateway layoffs included a few professional services staff who remained at the company after Gateway sold its Professional business in October to MPC Computers, Nampa, Idaho.