Gateway receives $450m offer for retail arm

NEW YORK: Lap Shun Hui, owner of Joui International and the former owner of eMachines, said on Tuesday he has submitted a bid to buy the retail operations of computer maker Gateway for $450m. In a letter to Gateway’s board, Hui also said he would be willing to explore buying all outstanding shares in the whole company.

The offer for the retail operations was first submitted on August 3, but Gateway did not “constructively engage in discussions” with Hui and his advisers, the letter said.

Hui said that to compete effectively, Gateway must separate its retail operations from its other businesses and make changes to improve its margins. Gateway said in a statement early on Wednesday that its board of directors will review the offer from Hui.

Gateway shuttered its 188 retail stores and now sells inexpensive PCs under the eMachines brand, which it bought in ’04, through major electronics retailers. Earlier this month, Gateway, the third largest US personal computer maker, reported a second-quarter net loss of $7.7m or 2 cents a share.

During that period, revenue at its retail unit rose 21% to $592m as it gained market share in the US.
Over the past several years, Gateway has lost market share to industry leaders Dell and Hewlett-Packard Co.