Acer’s proposed acquisition of US PC maker Gateway is under fire from two investor lawsuits, both alleging that the latter failed to adequately inform and consult its investors before agreeing to the sale.
According to filings submitted by Gateway with the US Securities and Exchange Commission, one lawsuit has been filed in the state court of California while the other has been filed in chancery court of Delaware – the state the vendor is incorporated in.
According to the SEC filings, the first suit – Mark Alger v. Gateway – was filed on August 31st in Orange County, California. The suit accuses of Gateway and its board of agreeing to sell the company below its worth to Acer. Gateway famously turned down a bid from Compaq (now owned by Hewlett Packard) for $7 billion in 1997, although the company lost that kind of market value after the end of the dot-com boom combined with the overwhelming success of Dell.
Referring to the lawsuit in the SEC filing, Gateway said: "The lawsuit alleges, among other things, that the company’s directors breached their fiduciary duties to stockholders by approving the merger agreement and claims that the price per share fixed by the merger agreement is inadequate and unfair."
The other lawsuit filed by Cin v Clarke, et al accuses Gateway’s board of not providing enough information to shareholders for them to make an informed decision as to whether or not they should have accepted the deal.
Gateway, revealing the existence of the lawsuit in its filings with regulators on Monday, said: "The lawsuit alleges, among other things, that the company’s directors breached their fiduciary duties to stockholders by approving the merger agreement and the transactions contemplated thereby, including but not limited to the offer, and claims that these transactions are both unfair and coercive to the public stockholders in a sale of the company."
The proposed takeover would alongside making Acer the third largest PC vendor worldwide, it would also gain access to the US PC makers channel infrastructure as well first refusal on European PC maker Packard Bell – a right that Acer’s CEO and chief executive Wang Jen-tang has already stated his company intends to exercise.
Should the case be successful, it could have ramifications for Acer’s purchase of Gateway.