Ingram Micro gobbles Tech Pacific

Deal valued at $493 million

Ingram Micro Inc, the $ 25 billion IT distribution major, has signed a

defi-nitive agreement to acquire Sydney-based Tech Pacific for approximately $

493 million in cash. This move is expec-ted to help Ingram signifi-cantly expand

its APAC busi-ness. The transaction is ex-pected to be accretive to Ing-ram

Micro's 2005 earnings (excluding integration costs) and close by the end of

2004, subject to customary closing conditions.

"This acquisition provides a giant leap forward in our regional

development. Tech Pacific is a strong, profitable player in some of the region's

key markets. It is the market leader in two of the region's most stable

markets-Australia and New Zealand-as well as the rapidly growing, emerging

market of India," said Kent Foster, Chairman and CEO, Ingram Micro Inc.

Interestingly, Singapore-based Shailendra Gupta, CEO of Tech Pacific and Guy

Freeland, CFO would be retained while Alain Monie, President, Ingram Micro Asia

Pacific will continue to lead the region. As a result of this acquisition,

Ingram Micro Asia Pacific will nearly double in size in terms of revenues and

will become the number one distributor in India, Australia, New Zealand,

Malaysia, Hong Kong and Singapore. The company also expects its profitability

for Asia Pacific to significantly improve, with regional operating margins

expected to strengthen in the next fiscal year.

Commenting on the acquisition, Gupta said, "We've been seeking a

strategic partner that could help our customers-both resellers as well as

vendors-expand their reach into new products, services and geographies. At the

same time, we wanted to ensure a stable transition for our associates. Ingram

Micro is the world's largest distributor and the only distributor with a truly

global presence, so a combination offers an ideal strategic fit."

Established in 1981 with principal operations in Sydney, Tech Pacific,

generated A$ 3.1 billion in revenues and opera-ting margins of approximately two

percent of revenues for the 2003 fiscal year. The privately-held company employs

close to 1,800 people and operates 15 distribution centers in Australia, New

Zealand, India, Hong Kong, Malaysia, Singapore and Thailand. It serves around

25,000 channel partners and 75 vendors with a portfolio of more than 10,000

products.

Primarily, Ingram Micro has two major benefits from this deal. Firstly, its

Asia Pacific revenue will now get doubled. Secondly, it will become the number

one distributor in Australia and India-two very important markets in the

region where it does not enjoy a strong position.

At the same time, it must be said that Ingram has been experiencing strong

growth in India in the last couple of years. On the other hand, Tech Pac has

been lagging far behind on that score. As a result, the gap between the two had

narrowed down considerably as far as topline is concerned. Which essentially

means that in all probability Ingram would have become the numero uno disti in

India within the next two years or so.

However, Ingram has gained quite a number of principals in India with this

deal. Some of the important ones are Adobe, AMD, APC, Canon, Epson, HCL and

Oracle. In addition, there is a strong possibility of the new merged entity

leveraging its considerable infrastructure and resources to get into newer areas-other

than IT.

Consumer electronics could be its first foray. Already, Ingram India has

started distributing digital cameras and MP3 players of Samsung. In the US, its

parent got into the distribution of Sony consumer electronics earlier this year.

CyberMedia News


New Delhi