Tech Data is looking to gain its long-overdue entrance into the UKllion alliance. market after it was revealed that talks were being held with Computer 2000's parent company, Viag.
The channel was awash with speculation last week that Munich-based conglomerate Viag and US distribution giant Tech Data were discussing a number of options, including a share swap, which may lead to a merger, or a strategic alliance.
A takeover of Viag by Tech Data was seen as unlikely because it would over-stretch Tech Data financial capabilities.
Viag admitted last year that it was looking to off-load its 75 per cent stake in Computer 2000 since it felt that growing pressure on distributor margins did not make it an attractive investment.
One observer said: 'I know that the talks are going on, but we are not sure about which way the discussions will go. I would guess that there would be some sort of strategic co-operation between C2000 and Tech Data.'
In a statement, Viag confirmed it was in talks with potential strategic partners but refused to comment on a link-up with Tech Data.
Observers and analysts have commented that the potential merger of C2000 and Tech Data would be beneficial to both parties, creating the largest IT distributor in the world - with combined sales of more than $11 billion a year.
Since C2000 entered the US market in 1994 with the purchase of Ameriquest, the distributor has failed to capture a significant market share, producing a loss each year. In turn, a merger with C2000 would give Tech Data its long-awaited presence in Europe. While Tech Data has a German and French subsidiary, it has failed to become a domineering force.
C2000 UK and Tech Data refused to comment.
Last week, Tech Data reported a 61 per cent increase in its 1997 fourth quarter results ended 31 January. The distributor achieved $26.1 million net profit and made sales of $2.1 billion.
The results included sales from its German subsidiary and its partnership with IBM, which allows the distributor to ship PCs directly from IBM's North Carolina factory.
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