EMachines founder Lap Shun “John” Hui has offered $450 million to buy Irvine-based Gateway Inc.’s business selling computers through stores.
Gateway’s shares closed up more than 13% Wednesday on the news.
Hui is Gateway’s second-largest shareholder after founder Ted Waitt. In 2004, he sold low-cost PC maker eMachines to Gateway for $290 million.
Gateway’s growing retail operations should be separated from the company’s more sluggish business selling computers directly to consumers, businesses and governments, Hui said.
The China-born Orange County businessman said he first approached Gateway with his proposal in early August.
“I am very disappointed that Gateway has chosen not to constructively engage in discussions with me and my advisers on the proposal that I sent to you on Aug. 3,” Hui wrote in a letter this week. “I believe that management and the board need to adopt a sense of urgency to address Gateway’s problems.”
Hui said he would consider buying all of Gateway and separating the retail businesses himself.
Gateway said its board is set to review Hui’s bid.
Hui also took aim at Gateway’s lack of a permanent chief executive since former eMachines boss Wayne Inouye left earlier this year.
“The failure to name a replacement CEO for over six months has left Gateway in a position where it is unable to clearly and credibly articulate its strategic direction to the market,” Hui said.
The bid raises the question of whether Hui would bring back Inouye to run Gateway’s retail operations.
After Hui sold eMachines to Gateway, Inouye took over as Gateway boss in early 2004. He led the company to profitability in 2005. Gateway previously posted five years of losses.
Inouye left Gateway after directors became concerned about slower growth in more profitable direct sales.
At eMachines, Inouye turned around the PC maker by stressing sales through big retailers and better quality and service.
Last month, reports surfaced that Hui could be looking to buy Packard Bell’s European unit from Tokyo-based NEC Corp.
The sale could be as much as $87 million.
Observers speculate the deal could involve Inouye, though he could be restricted by a non-compete contract from his stint at Gateway.
Hui made a name for himself in the computer industry in 2002, when he invested about $160 million in then-struggling eMachines and took the company private.
He’s cofounder of South Korea’s Korea Data Systems, one of two companies that together started eMachines in 1998.
