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Ingram Micro: Business As Usual After $6B Buyout

Ingram Micro, the world’s largest IT distributor, anticipates little change in its day-to-day dealings with customers following its planned $6 billion acquisition by Chinese conglomerate HNA Group later this year.

And in communications with TWICE, its retail and vendor partners apparently agree.

According to Ingram’s investor relations executive director Damon Wright, the only change for the company and its subsidiaries — including custom integration distributor AVAD — will be the freedom to plan and invest for the long term, after its deep-pocketed parent frees it from any quarter-to-quarter concerns.

“We will have more flexibility and the opportunity to invest faster in our strategic initiatives,” he told TWICE in an email. This, he said, can help its partners “achieve their objectives even faster” by providing more products and solutions to build their businesses.

Otherwise, Wright said, “There will be no changes to our management team or to our associates or our facilities as a result of this merger. We anticipate no impact, and business as usual.”

Jim Ristow, CEO of BrandSource, concurred. The $12 billion buying group leverages Ingram’s infrastructure for its in-house Expert Warehouse fulfillment centers, and after several discussions with his distribution partner, “We do not see any [change] in our relationship with Ingram,” Ristow told TWICE, adding, “There may be positive aspects” to the acquisition.

Likewise, Lenovo, in a statement issued to TWICE, noted that its partnership with Ingram is “very successful” and that its “executive teams are aligned.

“Ingram Micro is a longstanding distributor of Lenovo products including ThinkPad, ThinkCentre, Think-Server, System X, and associated options and services,” the vendor said. “We have the utmost confidence that they will continue to serve our partner community with Lenovo client and enterprise solutions.”

But U.S. rival D&H Distributing, which provides IT and CE products and services to dealers, e-tailers, installers and resellers nationwide, was less sanguine about the buyout. As co-president Dan Schwab observed, “Most companies tout no change after an acquisition, but in many cases, focuses do shift over time,” creating new opportunities for competitors.

“The customer and manufacturer will always have the last word in the success of any merger or acquisition,” he told TWICE in an email. “If they don’t see the same level of value, or if a certain focus diminishes through the course of the transition, resellers and manufacturers might look to alternative sources.”

Schwab also believes that the offshore acquisition signals further consolidation within the channel, given distributors’ attractive valuations.

“Many multinational, broad-line distributors are migrating their model toward services, in order to diversify and increase their market valuation,” he noted. “Historically many distributors trade only at book value, not the multiples that are seen in other industries. This factor actually makes acquisitions easier for well-capitalized companies.”

Under terms of the deal, which is expected to close in the back half of the year, Ingram will operate as a subsidiary of HNA holding Tianjin Tianhai, an Asian logistics provider.

Ingram expects to remain headquartered in Irvine, Calif., with its executive management team in place, including Alain Monié continuing as CEO. Echoing Wright’s assurances, all lines of business and all regional and country operations “are expected to continue unaffected,” Ingram said.
— Additional reporting by Steve Smith and Joseph Palenchar