Gateway Inc. (NYSE:GTW) announced today that it would reject John Hui's $450 million bid for the retail operations of the company. Management and the board of directors maintained that the transaction would not be in the best interest of shareholders. Shortly after the announcement the stock moved down 2.5% to settle at $1.95 (where the buyout premium is now at 11%). The company did not address a seperate offer by Hui to potentially acquire all outstanding shares in the company at an unspecified price.

Earlier this year, the company retained Goldman Sachs as a financial advisor to help the company enhance shareholder value. Moreover, a recent 13D filing with the SEC also revealed that Gateway stock has been heavily accumulated by Harbert Management Corp. According to the filing on August 21, 2006, the fund "submitted a letter to the Issuer's Chairman and interim CEO to offer the board and management assistance in their efforts to enhance shareholder value". The filing does not indicate that the hedge fund would seek any extraordinary measures such as the liquidation of the company, sale of the company, or other similar measures.

With the possibility of a future bid for all of the company's shares by Hui, along with the restructuring help of Harbert and Goldman Sachs, Gateway is certainly a company to keep a close eye on as they attempt to improve shareholder value.

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