Taipei based Acer Inc. announced today that it has finalized an agreement to acquire Gateway Inc.

Acer is the world's third largest PC maker, and Gateway is fourth, but it's a leading retail PC provider in the US. The deal will create a multi-branded $15 billion company, with shpiments of over 20 million PCs per year. Keep in mind that Acer's revenue last year was $11.32 billion.

Acer will start a cash tender offer to purchase all outstanding Gateway shares at $1.90, a total equity value of $710 million. The has been approved by the boards of directors of both companies and should be closed by December 2007.

In addition to the Acer deal, Gateway has already announced that it plans to acquire a significant stake in PB Holding Company, the parent company of Packard Bell, a company well known on the European market for its affordable notebooks.

J.T. Wang, Chairman of Acer, said that the acquisition will help Acer strengthen its US position through the Gateway brand, and solidify Acer's position as the third largest PC vendor in the world.

The combination of Acer and Gateway is expected to result in significant revenue and cost synergies. The considerable increase in scale will result in reductions in per unit procurement and component costs for both companies.Significant savings are also expected through the increased efficiency of the combined back-office functions.