Expands global footprint and penetration into
attractive end markets
Accelerates market share growth across
Insight’s solution areas
Substantial run-rate operating synergies of $70
million
Insight Enterprises (Nasdaq: NSIT), the global provider of
Insight Intelligent Technology Solutions™ for organizations of all
sizes, (“Insight”), and PCM, Inc. (Nasdaq: PCMI), a provider of IT
products and services (“PCM”), have entered into an agreement under
which Insight will acquire PCM for $35 per share, representing a
36% premium to its 1-month average closing share price as of
Friday, June 21, 2019. The transaction implies an enterprise value
of approximately $581 million (including cash and debt
acquired).
PCM, based in El Segundo, California, is a provider of
multi-vendor technology offerings, including hardware, software and
services to small, mid-sized and corporate/enterprise commercial
clients, state, local and federal governments and educational
institutions across the United States, Canada and the United
Kingdom. PCM has offices in 40 locations across these geographies
and has more than 4,000 teammates, including more than 2,700
client-facing teammates in sales, technical and service delivery
roles.
“Over the past five years, Insight has made significant
progress, transforming our business from a value-added reseller to
a well-respected global solutions provider with deep expertise
across technology areas that provide our clients with significant
value. Together with PCM, we will be even better positioned to
capitalize on our solution area investments through the addition of
more technical and sales resources and access to thousands of new
clients, especially in the mid-market and corporate client
segments,” said Ken Lamneck, CEO of Insight.
The combination of the two organizations extends Insight’s reach
into areas where clients need help most: positioning their
businesses for future growth, transforming and securing their data
platforms, creating modern and mobile experiences for their
workforce and optimizing the procurement of technology. Together,
the combined organization will be able to offer partners an even
stronger salesforce globally, with increased footprints in North
America and the United Kingdom.
“The acquisition of PCM accelerates our opportunity to grow
share within our four solution areas: Supply Chain Optimization,
Connected Workforce, Cloud + Data Center Transformation and Digital
Innovation. The addition of PCM complements our Supply Chain
Optimization business, adding scale and clients in the mid-market
and corporate space in North America. PCM’s services offerings add
scale and capabilities to our Connected Workforce and Cloud + Data
Center Transformation solution areas and support our strategy to
grow our solutions business,” said Steve Dodenhoff, president of
Insight’s North America business.[
“This combination offers the ability to provide clients with
greater value through the expansive solution offerings of the
combined company at a time when customers increasingly need a
full-service technology solutions provider to help them transform
for the future. Together, we will be able to offer an impressive
level of breadth, scale, partnerships and services to meet our
clients’ needs and exceed their expectations. On behalf of our
Board of Directors, we are very pleased to announce this
combination which we believe maximizes our shareholders’ value, and
we look forward to the resulting opportunities that lie ahead for
our employees, customers and vendor partners,” said Frank Khulusi,
chairman and CEO of PCM.
Insight expects to realize annual run-rate cost synergies of
approximately $70 million by the end of 2021, with more than 50
percent of this to be realized in the first twelve to eighteen
months, primarily related to the consolidation of IT and delivery
systems, and real estate and operational integration.
“Insight has a disciplined operating model for evaluating
acquisitions and efficiently integrating these businesses
post-closing, which has allowed us to deliver well on the financial
commitments of acquisitions we have made in the past few years. As
we move towards the closing and integration of PCM, we expect to
deploy these same best practices to deliver the expected synergies
in our financial results,” stated Glynis Bryan, chief financial
officer of Insight. “We believe this transaction will contribute
materially to shareholder value as we execute our plans.”
Insight expects the acquisition to add more than $0.70 to
Adjusted earnings per share in 2020, excluding:
- approximately $25 million in transaction-related costs and
restructuring expenses, most of which will be incurred in 2019,
and
- intangibles amortization expense.
Terms and Financing
The transaction is subject to certain customary closing
conditions, including regulatory approvals and approval of PCM’s
shareholders, and is expected to close in the second half of
2019.
Insight will fund the acquisition through cash on hand and
borrowings under a new Asset Based Loan revolving credit
facility.
Advisors
J.P. Morgan Securities LLC is acting as financial advisor and
Sullivan & Cromwell LLP is acting as legal advisor to
Insight.
B. Riley FBR, Inc. is acting as financial advisor and Sheppard,
Mullin, Richter & Hampton LLP is acting as legal advisor to
PCM.
Conference Call
Insight will host a conference call and webcast today, June 24,
2019, at 8:00 a.m. ET to discuss the transaction.
The live conference call is available by dialing (877) 524-8416
from the U.S. or (412) 902-1028 from outside the U.S. and entering
conference code 13691035. Supporting materials, as well as a link
to an audio webcast of the conference call, will be available at
https://investor.insight.com/.
A replay of the conference call will be available for a limited
time beginning approximately one hour after completion of the
conference call and can be accessed via the Insight website at
https://investor.insight.com/.
Certain statements contained in this communication may
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements can typically be identified by such words as “aim”,
“anticipate,” “believe,” “continue,” “could,” “estimate,” “evolve,”
“expect,” “forecast,” “intend,” “looking ahead,” “may,” “opinion,”
“plan,” “possible,” “potential,” “project,” “should,” “will,” and
variations of such words and other similar expressions.
These forward-looking statements are only predictions based on
current expectations and assumptions and are inherently subject to
risks and uncertainties, some of which cannot be predicted or
quantified. There are important factors that could cause actual
results to differ materially from the results expressed or implied
by forward-looking statements, including (i) the risk factors set
forth under “Risk Factors” in Insight’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018, in PCM’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2018, set forth
in Insight’s or PCM’s subsequent Quarterly Reports on Form 10-Q or
set forth in Insight’s or PCM’s other filings with the SEC and (ii)
any of the following: the failure of Insight to obtain the
financing anticipated to consummate the Merger; the failure to
consummate or a delay in the consummation of the Merger for other
reasons; the timing to consummate the Merger; the risk that a
condition to the consummation of the Merger, including the receipt
of any required regulatory approvals, may not be satisfied or
waived; the failure of PCM’s shareholders to approve the Merger;
unexpected costs or liabilities in connection with the consummation
of the Merger; Insight’s inability to achieve expected synergies
and operating efficiencies as a result of the Merger, whether
within the expected time frames, without undue difficulty, cost or
expense, or at all; Insight’s inability to successfully integrate
PCM’s operations into its own, whether within expected time frames,
without undue difficulty, cost or expense, or at all; the level of
revenues following the transaction, which may be lower than
expected; operating costs, customer loss and business disruptions
arising from the Merger and the pendency or consummation thereof
(including, without limitation, difficulties in maintaining
relationships with employees, customers, clients or suppliers),
which may be greater than expected; uncertainties surrounding the
transaction; the outcome of any legal proceedings related to the
transaction; other adverse economic, business, and/or competitive
factors; risks that the pending transaction distracts the
management of Insight or PCM or disrupts current plans and
operations; Insight’s ability to retain key PCM and Insight
employees; and other risks to consummation of the transaction,
including circumstances that could give rise to the termination of
the merger agreement and the risk that the transaction will not be
consummated within the expected time period, without undue delay,
cost or expense, or at all.
All forward-looking statements are qualified by, and should be
considered in conjunction with, these cautionary statements.
Readers are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date on
which such statements are made. Except as required by applicable
law, neither Insight nor PCM undertakes any obligation to update
forward-looking statements to reflect events or circumstances
arising after such date.
Additional Information and Where to Find It
In connection with the Merger, PCM will file with the SEC a
proxy statement on Schedule 14A (the “Proxy Statement”), as well as
other relevant materials regarding the Merger. Following the filing
of the definitive Proxy Statement with the SEC, PCM will mail the
definitive Proxy Statement and a proxy card to each shareholder
entitled to vote at the special meeting relating to the Merger.
[PCM] SHAREHOLDERS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT
AND OTHER MATERIALS RELATING TO THE MERGER (AND ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. The definitive proxy statement, the
preliminary proxy statement and other relevant materials regarding
the Merger (when they become available), and any other documents
filed by PCM with the SEC, may be obtained free of charge at the
SEC’s website (http://www.sec.gov), at PCM’s investor website
(http://investor.pcm.com) or by writing or calling PCM at Office of
the Secretary of the Company, 1940 E. Mariposa Avenue, El Segundo,
CA 90245 or (310) 354-5600.
Participants in the Solicitation
PCM and its directors are, and PCM’s officers and Insight and
its directors and officers may be deemed to be, participants in the
solicitation of proxies from PCM’s shareholders with respect to the
Merger described in the Proxy Statement. Information about PCM’s
directors and executive officers and their ownership of PCM’s
common stock is set forth in PCM’s Form 10-K/A filed with the SEC
on April 30, 2019 (PCM’s “Form 10-K/A”). To the extent that
holdings of PCM’s securities have changed since the amounts printed
in PCM’s Form 10-K/A, such changes have been or will be reflected
on Statements of Change in Ownership on Form 4 filed with the SEC.
Information regarding the identity of the participants in the proxy
solicitation and their direct or indirect interests in the
transaction, by security holdings or otherwise, will be set forth
in the Proxy Statement and other materials to be filed with SEC in
connection with the Merger. Information about the directors and
executive officers of Insight is set forth in the proxy statement
for Insight’s 2019 Annual Meeting of Stockholders, which was filed
with the SEC on April 10, 2019.
About Insight
Today, every business is a technology business. Insight
Enterprises Inc. empowers organizations of all sizes with Insight
Intelligent Technology Solutions™ and services to maximize the
business value of IT. As a Fortune 500-ranked global provider of
Digital Innovation, Cloud + Data Center Transformation, Connected
Workforce, and Supply Chain Optimization solutions and services, we
help clients successfully manage their IT today while transforming
for tomorrow. From IT strategy and design to implementation and
management, our 7,400+ employees help clients innovate and optimize
their operations to run business smarter. Discover more at
www.insight.com. NSIT
About PCM
PCM, through its wholly-owned subsidiaries, is a leading
multi-vendor provider of technology solutions, including hardware,
software and services to small, medium and enterprise businesses,
state, local and federal governments and educational institutions
across the United States, Canada and the UK. PCM generated net
sales of approximately $2.2 billion in the twelve months ended
March 31, 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190624005168/en/
INVESTORS: Insight Enterprises, Inc. Glynis Bryan, 480-333-3251
GLYNIS.BRYAN@INSIGHT.COM or Helen Johnson, 480-333-3234
HELEN.JOHNSON@INSIGHT.COM or PCM, Inc. Brandon LaVerne, (310)
225-5080 Brandon.LaVerne@PCM.com or MEDIA: Insight Enterprises Amy
Protexter, 480-409-6710 AMY.PROTEXTER@INSIGHT.COM or Sloane &
Company Ariel Kouvaras, 212-446-1884 AKOUVARAS@SLOANEPR.COM
PCM (NASDAQ:PCMI)
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