SA's largest PC distributor, MB Technologies, is buying out the local unit of international giant Ingram Micro.
The companies have had a distribution relationship for some time, but the deal will see Ingram Micro absorbed into MB Technologies.
MB Technologies has approached the competition authorities for permission to buy out Ingram Micro SA, an indication that the deal is large enough to warrant approaching the authorities. However, no value has been disclosed.
MB Technologies CEO Glenn Fullerton explains that the rationale behind the deal is the “strategic importance of the components business to the group, and the success that has been achieved in building this business over the past three years”.
Tough times
Ingram Micro was recently awarded the African Distributor of the Year award, at the EMEA Channel Academy Awards 2010, in Monaco. Its product range includes brands such as Targus, Sony, 3Com, Acer, Asus, Billion and Microsoft.
Ingram Micro SA is a joint venture between Ingram Micro Europe, a division of the world's largest distributor and New York Stock Exchange-listed Ingram Micro Incorporated, and MB Technologies. The venture was formed about three years ago, which marked Ingram Micro's entry into SA.
According to Ingram Micro's latest financial report for 2009, it operates in the US, Canada, Europe and Middle East, as well as Asia Pacific and SA.
During the year, it exited its broad-based distribution business, in Finland and Norway, and sold its broad-based distribution operations in Denmark. The company said it had been affected by a global decline in IT spending, with revenue slowing from $34.4 billion to $29.5 billion.
Consolidation trend
Irnest Kaplan, MD of Kaplan Equity Analysts, says the deal is symptomatic of companies taking advantage of the global recession, which affected many firms on an operational level.
“There are more opportunities for mergers and consolidations now than there was two years ago,” he says.
Kaplan explains that consolidations normally occur when economies and companies “turn south”.
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