EMachines agrees to $159 million buyout

Associated Press

IRVINE, Calif. — EMachines Inc., the third-largest vendor of desktop PCs sold through U.S. retailers, has agreed to a $159 million buyout offer from one of its founders and directors.

The proposed buyout, which must win approval from investors holding at least 90 percent of the stock, will not effect retail distribution, technical support or existing warranties, the company said yesterday.

"From the consumer's perspective, this transaction is seamless. There will be no disruption at the consumer level," said spokesman Mike Kilroy.

Current management, including president and chief executive Wayne R. Inouye, a veteran retailer, would be retained.

EMachines said Tuesday that its board had unanimously approved the offer. The all-cash bid from Lap Shun "John" Hui represents a 36 percent increase over his earlier proposal announced Nov. 9, and a 96 percent premium over the company's closing stock price on Monday.

A formal tender offer through Hui's EM Holdings Inc. is set to begin Monday.

EMachines, which sells its computers for between $399 and $999 after rebates, has never been profitable. As of Sept. 29, 2001, the three-year-old firm had accumulated losses of $301.1 million.

Executives recently told financial analysts that the Irvine-based company would break even or report a small profit in the fourth quarter ending Dec. 31.

They are expecting sales to receive a boost from the holiday season and consumers who have been waiting for the launch of Microsoft Corp.'s new Windows XP operating system, which comes pre-installed in EMachines computers.