Ingram Micro Inc. (IM) yesterday announced that it has bought a majority stake in Armada, the largest value-added technology distributor in Turkey. Per news sources, Ingram purchased the stakes through its Dubai-based subsidiary, Aptec Holdings Ltd. The recent move is in line with its strategy of expanding geographically and building adjacent capabilities.
Although the financial terms of the deal have not been disclosed by the company, some media reports have reported that Ingram has bought a 58% stake in Armada for $24 million. Further, the world’s largest computer products distributor intends to make a mandatory offer to buy the remaining shares of Armada per the regulations of the Turkish capital markets.
Istanbul-based Armada was formed in 1993 and offers services like enterprise solution and channel development for small and medium business (SMB) markets. Apart from this, the company offers credit, training and other professional services. The Turkish technology distributor generated sales of over $280 million in 2013.
Ingram Micro believes that the acquisition will enhance its reach in the rapidly growing Turkish technology market. Moreover, this will help it to broaden its value-added offerings.
It is worth mentioning that Ingram Micro has resorted to acquisitions to expand its geographic reach and product portfolio. Certain acquisitions in particular have strengthened the company’s foothold in the mid-range enterprise market.
Some of Ingram Micro’s major acquisitions include BrightPoint, Inc., Aptec Holdings Ltd. and Promark Technology Inc. During 2013, the company acquired SoftCom, CloudBlue and Shipwire which enhanced its products and services portfolio.
Furthermore, last week, Ingram Micro signed a binding offer with the French investment company, Butler Capital, to acquire Anovo, a Paris-based provider of after-sales support for phone and electronic devices. The acquisition, expected to close in the first quarter of 2015, is likely to expand Ingram’s global portfolio of service offerings and strengthen its supply chain capabilities in the European and Latin American markets.
Separately, Ingram Micro has been signing distribution deals with a number of original equipment manufacturers to expand its product portfolio. Moreover, the company’s exposure to cloud computing products is expected to remain the key growth driver.
We remain fairly optimistic about Ingram Micro’s strategic relationship with network giants such as Juniper Networks Inc. (JNPR), Cisco Systems Inc. (CSCO) and IBM Corp. (IBM). The company’s growing SMB exposure and improving profitability are encouraging. However, we remain apprehensive about the stock due to high debt exposure.
Currently, Ingram Micro has a Zacks Rank #3 (Hold).
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