Why Ingram Micro Was Acquired: Morgan Stanley’s Advice, View
Morgan Stanley, which advised Ingram Micro on the distributor’s sale to Tianjin Tianhai, has developed a document describing the rational for the $6 billion deal, which ChannelE2E has viewed.
According document, Morgan Stanley sees the following deal synergies for Ingram Micro and its partners:
- Ingram Micro will become part of a large organization that has complementary logistics capabilities including sea transportation, air transportation, ground transportation and modern logistics/cargo flow
- Opportunity to leverage HNA’s significant presence in China and other emerging markets to strengthen Ingram Micro’s existing businesses and expand into new markets
- Expand Ingram Micro’s IT distribution business and supply chain management capability into new fields, such as new consumer goods and industrial products
- Provide value-added services around the world by taking advantage of both parties’ global customer bases, HNA’s global supply chain capabilities and Ingram Micro’s global distribution network
- Leverage HNA’s financial and delivery arms, which may include improving supply chain financial service and enhancing storage capacity and land/sea/air multimodal combined transportation in China
The Morgan Stanley document also mentioned specific strengths of Ingram and the buyer, calling Ingram a “Global leader in technology and supply chain distribution services” across such areas as:
- Technology Solutions
- Mobility and Lifecycle Services
- Cloud Services Enablement
- Commerce & Fulfillment Solutions
Ingram Micro has over $40 billion of revenue (#62 on the US Fortune 100 list) from over 200,000 customers across 160 countries, the document noted.
Tianjin Tianhai, Morgan Stanley stated, is a publicly listed entity in Shanghai with ~$2 billion in cash. HNA Group is a privately held China based conglomerate structured around transportation, logistics and financial services. The company employs over 180,000 people worldwide; controls over $90 billion in assets including 820 aircraft, 330 retail stores, 450 hotels and 50 ships, the document mentioned.
Related ChannelE2E Coverage
- Ingram Micro Acquired By Tianjin Tianhai for $6 Billion: Breaking initial news about the deal, the regulatory considerations and more.
- Ingram Micro Buyout FAQ: An extensive FAQ, prepared by Ingram Micro, explains the reasoning behind the deal, along with continued commitments to employees, partners, compliance regulations, and Ingram Micro’s overall business.
- Ingram Micro CEO Letter to Employees: The email from CEO Alain Monie to all Ingram employees, assuring them that it will remain business as usual under new ownership.
- Ingram Micro Letter to Partners: An Ingram memo crafted specifically for partners, assuring them that relationships will remain unchanged — and highly valued.
Great coverage Joe! What I fund interesting is the valuation which turns out to be about 15% of annual revenue and a healthy premium over what the market has been recently trading the stock. I think it’s s clear message to every channel partner who continues to push hardware. The largest Hardware distributor in the world with more scale ($40B annual revenue) and more logistical assets than anyone else in the space, including some service lines of business just sold for 15% of revenue. What do you think your hardware business is worth???