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Ingram Micro Acquired by Tianjin Tianhai
- Transaction Size $7.2 billion
- EV/LTM Revenue 0.14x
- EV/LTM EBITDA 7.95x
- IT distributor Ingram Micro (NYSE:IM) announced today that it agreed to be acquired by China’s Tianjin Tianhai Investment Co. for $38.90 per share, for a total enterprise value of approximately $6 billion.
- The proposed share price represents a 39% premium over Ingram’s average closing share price for the last 30 days ended Tuesday. After the transaction was announced, the company’s share price rose 23% in after-hours trading to hit $36.53.
- Following the deal, which is expected to close in the second half of the year, Ingram’s management team will remain in place and the company will continue to be located in Irvine, California.
- Ingram will become part of HNA Group, the largest stockholder of Tianjin Tianhai. The group had total revenues of $29 billion in 2015 and its holdings include 11 publicly traded companies.
A Major Development for the Channel
- Ingram – A Distribution Giant: Founded in 1979, Ingram Micro has been one of the major distributors of IT products, including computers, software and accessories. The company has also recently branched into cloud and other higher-margin professional services, and is no stranger to M&A with eight acquisitions in the last year alone. Chip Lacy, Ingram’s former CEO who built the company to prominence, is in the IT Hall of Fame for a reason.
- Significant Disruption: This deal is very disruptive for the channel. All large accounts will use it as an opportunity to renegotiate agreements and improve their purchasing and credit arrangements. Expect to see lots of soap moving around the bathtub.
- Capitalizing On a Low Price: Ingram Micro has consistently traded at or around approximately 0.10x revenue for several years, resulting in a relatively inexpensive purchase price for Tianjin Tianhai while guaranteeing access to customers all over the world.
- Declining China Seeks Growth Abroad: With growth in China slowing, American companies have become increasingly attractive acquisition targets. According to Bloomberg, China’s publicly traded companies have announced $23.6 billion of outbound deals in 2016 – close to the 2015 total of $25.6 billion.
- Seeking Stability: As a US company with an international footprint primarily outside of China, Ingram is an attractive investment without Chinese governmental and regulatory interference.
- To be, or Not to Be?: Now that the deal has been announced and approved by both companies’ boards, it remains to be seen whether US authorities will allow it to go through. Ingram manages the supply chain for many US technology companies, and the US Committee on Foreign Investment has blocked similar deals on national security grounds.
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.