'They will take each other into other markets' - rival disties react to surprise Ingram news

Chinese logistics firm Tianjin Tianhai is hoping to buy Ingram for $6 billion
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Tianjin Tianhai, a logistics provider part of Chinese conglomerate HNA group, is hoping to acquire tech distributor Ingram Micro for $6 billion. So what do rival disties think of the news?

A senior source from a rival distie told PCR anonymously: "It was a surprise to me, but when you look at the two businesses, they complement each other.

"They will take each other into other markets, giving incremental revenues and profitability, or strengthen the business in markets where that offer them growth.

"I don’t believe the change will pose a huge challenge in our industry. Ultimately they will gain efficiencies in supply chain and backing for more acquisition, which is a trend we see from many companies today."

Dave Stevinson, Entatech MD, added: "There appears little abatement in China’s appetite for acquiring Western technology assets. I assume this is a change in equity ownership only at this stage but it certainly strengthens HNA Group’s capabilities and shows their ambitions in transforming to a supply chain management firm.

“Personally I am delighted to see the huge premium on the share price that has been agreed which fills me with incredible optimism and recognises the real value of channel distribution companies. 

“I was genuinely surprised and shocked to hear the news and it certainly makes my recent acquisition of Entatech appear very modest in comparison.”

Jon Harrison, partner at distributor Platinum Components, added: "It's a surprise. I expect Ingram will have increased buying power to expand into new sectors, have cheaper freight rates which will reduce costs for them, and increase operating profits… whether they pass that profit through or not is another matter.

"I expect the platform will stay the same, it could be good or it could be bad – let’s see."

The deal - which is expected to be completed in the second half of the year - has obviously sparked debate with other channel professionals across the world.

Others who have reacted to the news include Diane Krakora, CEO of US channel consulting firm PartnerPath, who said (as reported by Channel Insider): "Ingram Micro will have its work cut out for it in terms of maintaining partner loyalty. That's especially the case with smaller partners, many of which may decide that a distributor with ties to China represents a customer concern for them - or is simply not a partnership they want to make.

“We’ve all heard the pledges to existing management teams before. The partners are going to be aware that the Ingram Micro management team now has bosses they have to answer to every time they make a decision.”

Under terms of the deal, Ingram Micro’s stock will apparently no longer be publicly traded in the US.

“For the first time, distributors are being asked to invest in advance of revenues,” commented IDC analyst Darren Bibby. "At the same time, there’s also a lot more interest in China about finding ways to move cash out of the country."

In Australia, head of Staples Technology Solutions, Karl Sice, said: "Ingram always dreamed of having a wider, deeper capability to logistics and this gives them that.

"It is fascinating to watch what will happen in the vendor landscape. At the moment, we have more questions than answers. But it is exciting times. I've never seen a time in industry with so much change as we are witnessing now." 

Ingram says that the acquisition won't change how it does business with its vendor and reseller partners.

"HNA Group has a long history of investing in multinational companies and partnering with leading, well run brands to support and accelerate management’s strategic initiatives," said Ingram in a statement.

"Importantly, more than anything this merger represents a change in Ingram Micro’s equity ownership and will not impact the way we do business with our vendor and customer partners. HNA Group has assured us that Ingram Micro will continue to be headquartered in Irvine, California, our management team and associates are all expected to remain in place and our local country operations and execution on our strategies will continue unaffected.

"Our commitment to maintaining and building on our trusted relationship with our vendors and customers as a value-add partner will not change, and we remain dedicated to our core values that have made Ingram Micro an industry leader. In fact, HNA Group’s pillars of focus are well aligned with our core values, including a commitment to integrity, performance and innovation."

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