Daily Management Review

Chinese Company to Buy Ingram Micro for $6 Billion


02/18/2016




Chinese Company to Buy Ingram Micro for $6 Billion
The technology distributor Ingram Micro would be bought by Tianjin Tianhai, a Chinese shipping group for $6 billion in the latest mega-deal that involves a Chinese company.
 
Ingram, based in Irvine, Calif., said that it would be able to increase investment and expand its geographical reach with the help of the deal where Tianjin Tianhai has agreed to pay $38.90 a share. Its share repurchase program and its quarterly dividend payment program would be suspended by Ingram until the deal is complete.
 
This represents a premium of about 39% over the average closing share price of Ingram Micro for the 30 trading days ended Tuesday. Ingram shares rose 23.6% to $36.65 in after-hours trading.
 
There is a growing atmosphere of wariness in Washington over Chinese acquisitions of technology companies in the United States and this large deal comes amidst such an environment.
 
Due to the fears that the deal would not get regulatory approval from the Committee on Foreign Investment in the United States, also known as Cfius, Fairchild Semiconductor International rejected a $2.5 billion bid from Chinese state-backed buyers on Tuesday.
  
Tianjin Tianhai would be required to pay Ingram a termination fee of $400 million under several circumstances was revealed by regulatory filings on Wednesday. Among these there is a payment for the dismantling of the deal by antitrust concerns or a review by Cfius.
 
Personal computers and other technology products including printers, scanners, TVs, videogame consoles, video monitors and software are distributed by Ingram which was founded in 1979. It6 is considered as the largest distributor of the above products in the US. Recently a range of higher-margin professional services was started by the company.
 
HNA Group, an air transport and logistics company based in Hainan, China would now include Ingram as one of its subsidiaries. The company said it did not expect any disruptions and Alain Monié, Ingram’s chief executive, will remain in place. Tianjin Tianhai is itself a subsidiary of HNA Group.
 
HNA Group has business interests in shipping as well as into operations that include transportation, logistics, tourism, banking and insurance and has a total of more than 180,000 employees.
 
“We look forward to supporting Ingram Micro’s management team and strategies, including continued expansion into new geographies, while also offering their vendor and customer partners access to new and complementary offerings,” Adam Tan, the chief executive of HNA Group, said in a news release.
 
The deal would help HNA to reach “business opportunities in emerging markets, which have higher growth rates and better profitability”, and that Ingram would become the biggest revenue generator for HNA Group, Tan said.
 
HNA Group’s logistics and its presence in China would support the growth of Ingram, said Monié.
 
While Weil, Gotshal & Manges acted as legal counsel, China International Capital Corporation and Bravia Capital acted as lead financial advisers to HNA Group.
 
(Source:www.nytimes.com & www.wsj.com) 






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