What the Ingram Micro Acquisition Means to the Channel

Distribution giant Ingram Micro shook up the channel space this week with the announcement that it was being acquired by a Chinese investment company and folded into the conglomerate HNA Group, based in Hainan.

What does the deal mean for Ingram's channel customers and vendor partners?

First, the numbers: The deal announced Wednesday by Tianjin Tianhai Investment Co. Ltd. values Ingram Micro at $6 billion, which is a 39 percent premium over the average closing share price of Ingram Micro for the last 30 trading days. HNA Group is Tianjin Tianhai's largest shareholder.

Things are unlikely to change for Ingram customers and partners in the near term, other than potential customer churn and employee turnover related to uncertainty. While the boards have approved the deal, it is not expected to close until the second half of 2016, and it faces some substantial regulatory hurdles before that happens.

Executives of the companies went out of their way to vow that things wouldn't change for Ingram Micro's customers and vendor partners after the deal closes, either.

"Ingram Micro is expected to remain headquartered in Irvine, California, and Ingram Micro's executive management team will remain in place, with Alain Monié continuing to lead as CEO. All Ingram Micro lines of business and all regional and country operations are expected to continue unaffected," the companies said in a statement.

Monié said being part of HNA Group would allow Ingram to accelerate strategic investment. "Additionally, Ingram Micro will now be part of a larger organization that has complementary logistics capabilities and a strong presence in China that can further support the growth and profitability objectives of our vendor and customer partners," he said.

There are good structural reasons to believe that Ingram Micro may continue as it is in the near future, as well. If the deal is approved, Ingram would be the biggest single component of HNA Group, which also holds aviation, tourism and logistics enterprises. Tianjin-HNA are also looking to Ingram to help broaden the acquiring group's global reach. "After the transaction, Ingram Micro would...facilitate the internationalization process of the group," said Adam Tan, vice chairman of the board of directors and CEO of HNA Group, in the statement. "With the help of Ingram Micro, HNA Group would have access to business opportunities in emerging markets, which have higher growth rates and better profitability."

Add to that the Chinese economic slowdown, which means the growth appeal in China is less for Ingram now than it might have been a year or two ago.

At first blush, it looks like the deal does more for HNA than for Ingram, meaning it seems unlikely that HNA will tinker with Ingram extensively in the next few years.

Posted by Scott Bekker on February 18, 2016