Gateway Gets $450 Million Bid

Orange County Register ^ | August 23, 2006 | TAMARA CHUANG

[kellynla]

In a déjà vu for the Orange County computer industry, John Lap Shun Hui offered $450 million to buy the retail operations of Gateway Inc., the Irvine company that acquired Hui’s eMachines just 17 months ago.

Gateway’s shares shot up above $2 or nearly 20 percent Wednesday, after the offer was publicly revealed. The offer is about $1.21 per share.

Hui, who is one of Gateway’s largest shareholders, chastised the company in a letter dated Aug. 21 for failing to include him in addressing Gateway’s problems. He pointed to the changing computer landscape, Gateway’s slow reaction, low stock price and failure to hire a new chief executive six months after Wayne Inouye resigned.

When reached by phone Wednesday, Hui said his lawyers advised him not to comment. “Let the document speak for itself,” he said.

A Chinese immigrant whose legal name is Lap Shun Hui, he paid $161 million for eMachines in 2001 and three years later sold it to Gateway in a deal valued at $290 million -- $30 million cash and 50 million shares of stock.

In the letter, Hui advised separating the retail side of business from the professional and direct businesses. He offered to buy the retail division for $450 million, or $1.21 per share, on a debt free, cash free basis – a premium in excess of 70 percent from the shares he received from the eMachines sale.

The offer was 80 percent of Friday’s close of $1.54. “ Gateway's retail business is subsidizing its drofessional and direct businesses. The results of the professional business and, to a lesser extent the direct business, have been disappointing at best,” he wrote.

[Alex Murphy]

I used to work for a man who practically worshiped Gateway machines (he also campaigned for Perot, but that's another matter). Every PC in the office was a Gateway. This was back when Ted Waitt first moved operations out of his SD farm, before he sold the company (the first time). IMO Gateway's never been the same - company or product - since.

Guess what Ted Waitt's been up to recently?

[lovecraft]

Worst PC I ever bought...after that one, I just built my own...haven't looked back since.

[battlegearboat]

Moo Hoo.

[Attention Surplus Disorder]

Except for the SEC registration of the stock, I can't imagine why anyone would want to buy Gateway. But I also didn't make $130 million selling them emachines, nor did I sleep at a Holiday Inn last night.