Taiwan's Acer shares rise on Gateway merger talk

TAIPEI (Reuters) - Shares of Acer Inc. (2353.TW), the world's No.4 PC seller, rose as much as 1.6 percent on Tuesday amid market speculation that the company may buy U.S. computer maker Gateway Inc. GTW.N.

An Acer spokeswoman had no comment on the speculation.

Gateway shares rose 6.7 percent overnight and ThinkEquity Partners analysts said in a report that industry sources had indicated Acer may be planning to buy Gateway.

Acer's shares rose as high as T$63.20 on Tuesday, outpacing a 0.4 percent gain in the benchmark index .TWII.

Goldman Sachs analyst Henry King wrote in a research report on Tuesday that "we remain positive on Acer and believe a possible strong second quarter 2007 performance together with potential M&A or capital reduction should benefit the stock".

King currently rates the stock at "buy" with a 12-month target price of T$70.00, up 11 percent from its current level of T$62.90.

(US$1=T$33.1)