Westcon-Comstor sale spins a cautionary tale

Speculation has been swirling since the start of the year that value-added distributor Westcon-Comstor is for sale.

Westcon-Comstor is owned by $6 billion South African conglomerate Datatec Ltd. What’s interesting about Datatec is that they also own global ICT infrastructure solution provider Logicalis and market research firm Analysys Mason.

Usually these deals are kept quite hush-hush but Datatec came out recently and revealed it is considering selling Westcon-Comstor. So, the cats out of the bag. Datatec announced the possibility of dealing the distributor as a cautionary notice to shareholders. But what makes this “big reveal” interesting is it announced that they want more than US$800 million for Westcon-Comstor.

Then in the same breath Datatec says that while they are in negotiations with a buyer or buyers, it may decide not to sell Westcon-Comstor any more.

The next big question is who would want to buy Westcon-Comstor. Let’s look at the usual suspects:

Here are the Market Caps for the top distributors from Forbes.

  • Arrow $5.8 billion:
  • Ingram Micro $5.2 billion;
  • Synnex is at $3.3 billion; and
  • Tech Data $2.5 billion.
  • Let’s include D&H Distributing because they are a $3.5 billion revenue player, but not ScanSource because they are roughly a billion dollar plus player.

There is also an X-factor in all this. We could be looking in the wrong place. Last year Ingram Micro was acquired by HNA Group. No one would have predicted that.

The obvious choice is Synnex because they don’t have the Cisco business and the Comstor is all Cisco; all the time. Comstor is a special business unit of The Westcon Group dedicated to Cisco products, including TelePresence. Comstor – in essence Cisco – is close to half of Westcon’s business. Another added bonus is bigger footprint for Synnex in other regions outside of North America.

The thing that leads me to think it is Synnex is something executives from the Greenville, S.C.-based company said to me late last year at its Varnex Fall Conference and that is the market is over-distributed and expect to see more consolidation.

Here is my blog on that: Is Canada over distributed?

That could mean nothing and it could mean something. But last year did see Ingram moving and Tech Data acquiring Avnet.

And, this year its Westcon-Comstor.

One quick hit before I go. I just learned that Mandy Grewal, a CDN Women of the IT Channel honouree, has left SoftwareONE Canada. She goes out with a bang placing No. 37 on the CDN Top 100 list. CDN wishes Mandy the very best with her next challenge.

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Jim Love, Chief Content Officer, IT World Canada

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Former editor of Computer Dealer News, covering Canada's IT channel community.

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