Ingram Micro’s SEC (U.S. Security and Exchange Commission) file made for some interesting reading today. The most interesting part was in the preliminary merger proxy area where the world’s top IT distributor exposed merger talks with its chief rivals in distribution as early as January of 2015.
Click here if you want to read the whole thing, but I suggest to skip to page 24.
Let me speculate that it was either Tech Data or Synnex. I know not a total stretch. The SEC file does not name who it is. But you can guess and have at least a 50/50 shot at being correct. According to the story, Ingram’s rival decided to nix the deal because it thought there was no way the merger would be approved citing anti-competitiveness.
Then in late February 2016 the China conglomerate HNA Group buys Ingram Micro for $6 billion.
But before Ingram solidified the deal with HNA, it made an overture to another competitor it described in the SEC file as a “global information and communication technologies company or its value-add distributor business.” Again, unnamed in the SEC report; but be my guest if you want to guess. That company decided to not even bother going through the process and dismissed Ingram right off the bat.
So was Ingram Micro close to merging with one of its chief rivals? I’d say no.
I have reached out to many executives in distribution about this proposed deal from Ingram and no one yet has any knowledge of it.
I’m not sure why Ingram would want to do this type of deal given its position in the marketplace.
One executive with ties to Ingram believes the HNA deal was on the table for a long time and that Ingram needed to go through a process of evaluating other options including teaming up with its rival to pacify shareholders specifically those shareholders who might vote against the HNA sale.
There has been a lot of chatter about HNA/Ingram deal since it was announced and if it could pass regulatory hurdles because of issues with U.S. national security. Most executives I’ve spoken with believe it’s a rubber stamp. A few believe it will be harder than expected given the relations between China and the U.S. today.
What is more interesting to learn is why Alain Monie, Ingram CEO, and the board of directors had Ingram Micro up for sale. Ingram leads in distribution. It has ventured into better margin sales with professional services including cloud. Sure overall sales are down a bit, but Ingram remains quite profitable in those higher value areas and its cash flow improved significantly. If you read the SEC file it indicates that Ingram’s senior leadership and the board are constantly evaluating strategic alternatives, including opportunities for potential strategic transactions like the HNA deal.
Maybe, just maybe this is a case of selling your company when you don’t really have to sell it.
One quick hit before I go. Data storage vendor Infinidat has hired Brad Pierrepoint to run its Canadian operations. Pierrepoint was named Country Manager of Infinidat Canada. He has more than two decades of experience of building national sales teams and channel partnerships while at EMC, Data Domain and at Dell.