CDW to Acquire Leading IT Solutions Provider Berbee Information Networks Corporation
September 18 2006 - 7:30AM
Business Wire
CDW Corporation (NASDAQ:CDWC): -- Berbee provides a scalable
platform for CDW to grow its solutions and services capabilities --
Transaction is consistent with CDW's strategies to expand its
customer base, capture a greater share of its customers' IT
spending and increase its addressable market -- Accretive impact to
EPS in 2007 CDW Corporation (NASDAQ:CDWC), a leading provider of
technology products and services to business, government and
education, today announced that it has signed a definitive
agreement to acquire privately-held Berbee Information Networks
Corporation ("Berbee"), one of the nation's largest independent IT
solution providers, for approximately $175 million in cash. This
acquisition will enhance CDW's offerings of advanced technology
products and services to address customers' more complex business
requirements. In addition, the acquisition is consistent with CDW's
strategies to expand its customer base, capture a greater share of
its customers' IT spending and increase its addressable market. CDW
expects the transaction to be accretive to 2007 earnings by
approximately $0.05 per diluted share. The acquisition is expected
to close by the end of October, subject to certain customary
closing conditions including Hart-Scott-Rodino regulatory
clearance. "Our customers' IT challenges are increasingly complex -
customers want easy access to technology solutions," said John A.
Edwardson, CDW chairman and chief executive officer. "We are
committed to being the best-in-class, single source for both core
technology needs - and now with this acquisition, more advanced IT
services and solutions." Berbee has an established track record of
growth and profitability through the delivery of category-leading
services and IT products primarily across the Cisco, IBM and
Microsoft platforms. Founded in 1993, Berbee is a proven partner to
a broad spectrum of customers including corporate, healthcare,
education and state and local governments. Berbee provides
world-class solutions and engineering capabilities in advanced
technologies. Areas of expertise include network infrastructure and
unified communications, systems and storage, security, productivity
applications and managed services. Berbee is a national gold
certified partner with Cisco, a premier business partner with IBM
authorized to sell all IBM server and storage lines and has six
Microsoft gold certifications. Berbee received recognition as
Cisco's U.S. IP Communications Partner of the Year in 2005, an IBM
Beacon Award for Best IBM iSeries On Demand Solution in 2006 and
Microsoft Central Region Partner of the Year in 2006. For the
trailing 12 months ended July 31, 2006, Berbee's revenue was $390
million and earnings before interest, taxes, depreciation and
amortization was $22 million. Berbee has consistently grown revenue
at strong double-digit rates for the past five years. CDW's
objective is to double Berbee's revenue in five years on an organic
basis. As part of the transaction, Berbee's top three executive
officers, including Chief Executive Officer Paul S. Shain, have
agreed to remain with and lead the business. Berbee will operate as
a separate strategic business unit of CDW with its current product
and service offerings, management team, staffing, operations and
locations. Based in Madison, Wisconsin, Berbee has 11 offices and
two data centers in six Midwestern states and employs approximately
800 people. "CDW and Berbee have a strong common bond - we are both
industry leaders that focus on empowering coworkers and providing a
superior experience for our customers. We are confident that our
shared cultural values will enable our two organizations to succeed
together," said Edwardson. While CDW and Berbee's business models
are different, they are highly complementary. CDW is focused on a
diverse product selection from a wide variety of vendors, rapid
order fulfillment and value added services "around the box." The
sales model is primarily inside based with dedicated account
managers serving customers supported by technical specialists and
field teams. In comparison, Berbee incorporates both product and
service sales by offering advanced IT solutions from three primary
partners, Cisco, IBM and Microsoft. Services are provided by a team
of more than 300 billable engineers working at customer locations.
Berbee's sales model is primarily a field sales force working out
of 11 branch offices. "For CDW, this strategic transaction supports
our vision of becoming the world's biggest and best direct
technology provider. Berbee's proven ability to grow organically,
make accretive acquisitions and develop scalable business processes
offer us additional growth opportunities," said Edwardson. The
acquisition is consistent with several CDW growth strategies,
including: -- Expand the customer base: Approximately two-thirds of
Berbee's customers are currently not CDW customers. The companies'
complementary offerings will create significant cross-selling
opportunities. -- Capture a greater share of customers' IT
spending: The acquisition will accelerate CDW's solutions
capabilities. -- Increase the addressable market: The transaction
will expand CDW's portfolio to include higher-end products and
services. "Initially, CDW customers in Wisconsin, Illinois,
Minnesota, Michigan, Indiana and Ohio will benefit from gaining
access to one of the nation's finest IT engineering teams," said
Edwardson. "In addition to the near-term advantages of this
transaction, we are also excited about the opportunities to scale
Berbee's business processes and methodology into geographic regions
beyond the Midwest. Our financial, customer and organizational
resources support this platform for future growth." Berbee Chairman
and Founder James G. Berbee said, "It's very gratifying to know
that as Berbee moves onto an increasingly national stage it will
have a premier industry partner with the resources, cultural values
and commitment to support its growth as a leading national
solutions provider. I want to thank the Berbee staff members for
their dedication and hard work in consistently exceeding our
customers' expectations, building the premier IT solutions provider
in the nation and making this combination possible. They have a
bright future with CDW." Berbee Chief Executive Officer Paul S.
Shain said, "Today marks an important milestone for both Berbee and
CDW. Industry consolidation will increasingly reshape the solutions
provider marketplace. Once again, we're leading rather than
following key changes in the industry, just as CDW has done many
times before. We're fortunate to be able to partner with an
industry leader that is financially strong and shares our
commitment to advanced technology, extraordinary customer service
and similar cultural values. We're confident that CDW is the right
partner for the Berbee team." CDW will host a conference call
today, September 18, 2006 at 8:30 a.m. ET / 7:30 a.m. CT to discuss
this acquisition. The call-in number is 1-800-685-9697 (or
847-619-6797) and the confirmation number is 15761279. A replay
will be accessible by telephone through October 6, 2006 by dialing
1-888-843-8996 (or 630-652-3044), and the confirmation number is
15761279. The replay will be available 24 hours/day, including
weekends. Berbee was advised on the transaction by Piper Jaffray
& Co. Forward Looking Statement Any forward-looking statements
contained in this release are based on the Company's beliefs and
expectations as of the date of this release and are subject to
certain risks and uncertainties, including with respect to the
completion of the transaction, which may have a significant impact
on the Company's business, operating results or financial
condition. Should any risk or uncertainty materialize, or should
underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those described in forward-looking
statements. Factors affecting the Company's business and prospects
are discussed in the Company's filings with the Securities and
Exchange Commission. About Berbee Information Networks Corporation
Berbee Information Networks Corporation is one of the nation's
largest independent providers of IT solutions to a broad spectrum
of clients. More than half of the company's revenue is generated
from enterprise class customers that include some of the nation's
best known corporations. Berbee's areas of expertise include
network infrastructure and unified communications, systems and
storage, security, productivity applications and managed services.
Known for its world-class engineering and proven service excellence
in advanced IT technologies, Berbee has achieved high levels of
certification concurrently with its key vendor partners. Berbee is
a national gold certified partner with Cisco, a premier business
partner with IBM authorized to sell all IBM server and storage
lines and has six Microsoft gold certifications. Founded in 1993 by
Jim Berbee, a former IBM systems engineer, the company was formed
to provide a high level of services to clients in need of
networking and mid-range server technologies and, in the ensuing 13
years, has grown to become a leading IT solutions provider in the
Midwest including Wisconsin, Illinois, Minnesota, Michigan, Indiana
and Ohio. About CDW CDW(R), ranked No. 343 on the FORTUNE 500, is a
leading provider of technology solutions for business, government
and education. CDW is a principal source of technology products and
services including top name brands such as Acer, Adobe, Apple,
Cisco, HP, IBM, Lenovo, Microsoft, Panasonic, Samsung, Sony,
Symantec, Toshiba and ViewSonic. CDW was founded in 1984 and
employs approximately 4,450 coworkers. In 2005, the company
generated sales of $6.3 billion. CDW's direct model offers
one-on-one relationships with knowledgeable account managers;
purchasing by telephone, fax, the company's award-winning CDW.com
web site, customized CDW@work(TM) extranets, CDWG.com web site and
macwarehouse.com web site; custom configured solutions and same day
shipping; and pre- and post-sales technical support, with
approximately 120 factory-trained and A+ certified technicians on
staff. For more information about CDW: Visit CDW on the Internet at
http://www.cdw.com. Contact CDW Investor Relations via the Internet
at investorrelations@cdw.com or by telephone at 847-419-6328. CDW
is a registered trademark and CDW@work is a trademark of CDW
Corporation. Other company and product names may be trademarks of
their respective owners.
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