Distribution behemoth Tech Data is on a European expansion drive, snapping up six Specialist Distribution Group (SDG) companies in the UK, France and Netherlands for £220m.
The move, which signals Tech Data’s acquisition ambitions in Europe, will see SDG, the distribution arm of UK-based IT service group Specialist Computer Holdings (SCH), sell SDG, IQ Sys and ISI Distribution in the UK, ETC and Best’Ware in France plus ETC in the Netherlands to Tech Data.
The acquisitions, which are subject to EU regulatory approval, are expected to be completed by the end of 2013.
Tech Data said the acquisitions will strengthen its enterprise business, Azlan, as well as expanding its vendor and customer portfolios, and leveraging its pan-European infrastructure. The deal brings an additional 600 staff specialising in product, customer and operational disciplines.
The six companies generated third-party sales of approximately £1.1bn across a portfolio of data centre, software and broadline products from suppliers in the fiscal year ended 31 March 2012.
The product mix across the six companies comprises around 40% data centre products, including servers, storage and networking; approximately 20% software and around 40% broadline products, including PC's and peripherals.
The acquisition includes a supplier agreement, whereby the seller, through its IT reseller business, will have annual purchase commitments through Tech Data for a five-year period, which the company estimates will add incremental annual sales of £317m.
Robert Dutkowsky, CEO at Tech Data, said the transaction was part of Tech Data’s diversification drive. He said: ‘It adds both breadth and depth to our product and customer portfolios, and creates a comprehensive enterprise solution stack in networking and communications, server and storage and enterprise software across a broader pan-European footprint.’
He added: ‘Our solid balance sheet and strong infrastructure enable Tech Data to make strategic investments such as this that broaden our services and solutions for customers, strengthen our relationship with key vendors and improve overall profitability and returns for our shareholders.’
Sir Peter Rigby, SCH chairman, said the deal reflected the ongoing global consolidation of distribution businesses. He added: ‘We have seen the consolidation of distribution businesses worldwide in the course of the last few years and consider that now is the optimum time to pass SDG into the hands of a global player.
‘We believe that Tech Data will fulfil the aspirations of our distribution business and of our personnel and are pleased to have selected Tech Data as the acquirer.’
Rigby said the deal will allow SCH to focus on growing SCC, its international technology solutions and service provider business.