IM Ingram Micro Inc. (delisted)

Top information technology (IT) distributor Ingram Micro Inc. (IM) 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 2012.

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 million.

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 region.

Over time, Ingram has supplemented its business growth and geographic expansions with acquisitions. Recently, the IT distributor acquired wireless devices distributor, Brightpoint Inc. (CELL) 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.

 
BRIGHTPOINT INC (CELL): Free Stock Analysis Report
 
INGRAM MICRO (IM): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research