Gateway Sells Off Professional PC Business to MPC Corp.

September 19, 2007

Source: MPC- Corporation

MPC Corp., a PC maker from the U.S., on Wednesday said it had signed a definitive agreement with Gateway to acquire Gateway’s professional business. The acquisition will help MPC to broaden the market segments it can serve and will help the company to strengthen its positions on the market of professional solutions.

Similar to MPC’s business, Gateway’s Professional business targets customers in education, medium-sized business, and government with customized solutions including PCs, peripherals and services. This acquisition would provide MPC with the customers, products and employees to compete at a larger scale in the PC industry. The combined revenue of MPC and Gateway’s Professional business in 2006 would have been $1.2 billion.

“We believe that the customers of MPC and Gateway’s Professional business will benefit greatly from this combination. The new company will be totally focused on the markets of government, education, and small-and-medium business, and will develop products and services to meet the specific needs of these customers. It will have the scale to enable it to compete better against larger rivals in the PC industry. In addition, our customers will gain access to a wider range of PC products and services and continue to enjoy high-quality, U.S.-based service and support,” said John P. Yeros, chairman and chief executive of MPC Corporation.

With this acquisition, MPC expects to gain a more balanced portfolio of customer segments, with strong positions in federal government, state/local government, K-12 education, higher education, small business and mid-sized businesses. The combined company would offer a complete line of PCs and related products and services, with particular emphasis in mobile products, all-in-one desktops, servers and storage solutions.

MPC would own the entire catalog of products and services from Gateway’s Professional business, and would make them available to both MPC and Gateway Pro customers. As part of the terms of the arrangement, MPC will migrate these products from the Gateway brand to the MPC brand within one year. Likewise, Gateway Professional customers would be able to purchase the entire catalog of MPC products and services.

Under the terms of the definitive agreement, upon closing MPC would acquire Gateway’s leased final assembly facility located in Nashville, Tennessee, including the assembly of the Gateway Professional products that are produced there. In addition, MPC would acquire the portion of Gateway’s Consumer Direct business that targets businesses with less than 100 employees. MPC would also immediately assume responsibility for all operations and warranty support associated with Gateway's Professional business.

Based on MPC’s current assumptions and estimates, the transaction is valued at about $90 million, which will be paid using a combination of securities and cash.

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