Taiwan's Acer announced on Monday that it has agreed to acquire U.S.-based Gateway for $710 million, zooming past China's Lenovo to become the world's third largest computer maker behind U.S. makers Hewlett-Packard and Dell.

Acer said in a statement that the boards of both companies have approved the deal. It calls for the Acer to purchase all outstanding shares of Gateway for $1.90 per share. The deal is expected to close by December.

The acquisition of Gateway and its strong brand immediately completes Acer's global footprint, by strengthening our US presence, said J.T. Wang, Acer's Chairman. This will be an excellent addition to Acer's already strong positions in Europe and Asia.

Acer will keep the Gateway brand, adding to its lineup. the company said it will create a multi-brand strategy that will cover all personal computer segments.

Both Acer's and Gateway's geographical presences and product positioning are highly complementary, said Gianfranco Lanci, President of Acer. We believe that our combined scale will lead to significant efficiencies.

The computer maker intends to eventually differentiate the brands to address different consumer segments.

The deal allows Gateway to take advantage of Acer's global reach. Both companies stand to benefit from greater efficiencies from lower costs as well as new sales to each others’ customers. The companies expect to save at least $150 million through the merger.

Joining with Acer will enable us to bring even more value to the consumer segments we serve and capitalize on Acer's highly regarded supply chain operations and global reach to expand the scope of the Gateway and eMachines brands around the world, said Ed Coleman, Gateway's Chief Executive.

Acer's financial advisor for the deal is Citigroup Global Markets Inc., while Goldman, Sachs & Co. advised Gateway.