Top information technology (IT) distributor
Ingram Micro Inc.
) is reportedly taking over certain IT assets of Dubai-based
distributor Aptec Holdings Ltd. for an undisclosed sum. The deal is
expected to close before Ingram's third quarter ending September
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A 32-year old company, Aptec's technological portfolio consists of
products and services related to data center, storage, security,
networking and software. The company has its operations spread out
across the Middle East and North Africa and serves countries such
as the United Arab Emirates, Kuwait, Oman, Egypt, Lebanon, Pakistan
and Turkey. The company has tie-ups with 3800 resellers.
There is no doubt that a similar line of business will enable
Ingram to seamlessly integrate the unit. Assuming this, Ingram
believes that the deal could add annualized revenue of $250.0
Apart from revenue, the deal will extend Ingram's geographic reach
and help it build a position in a fast-growing market. Executives
at Ingram are expecting massive IT spending of roughly $80.0
billion by 2015. With Aptec, Ingram has a strong chance of
attaining a leading position in technology distribution in the
Over time, Ingram has supplemented its business growth and
geographic expansions with acquisitions. Recently, the IT
distributor acquired wireless devices distributor,
) for $840.0 million. The deal will boost Ingram's distribution
network and augment its high-margin Logistics business.
The back-to-back acquisitions are consistent with management's
commentary about increasing focus on high-margin segments and
strategic acquisitions to grow market share.
Though we believe that Ingram would be able to capitalize on the
improving IT spending, significant European exposure, debt burden
and a tough competitive environment concern us.
Currently, Ingram Micro has a Zacks #4 Rank, indicating a
short-term Sell recommendation.