Digital Systems product reseller ESS has scrapped plans to buy the two competitors that it was set to take over two months ago.
ESS parent Integrated Technology Europe (ITE) was negotiating with two indirect Vars, one in the South East and another in the North (PC Dealer, 13 March). ESS, which can source product direct as a Digital Systems product reseller, needs to grow to retain its status as the vendor has vowed to cut the number of its directly sourcing resellers.
The company is still considering the acquisition of other Digital resellers.
Philip Wade, marketing director at ITE, admitted the company has been approached and has negotiated with other Digital Systems resellers but no deals are being worked on at the moment. 'Peter Wilkinson (MD of ITE) said acquisition is worthwhile if the companies in question have the right people,' he said. 'Let's just say Digital's policy for its remaining product resellers has left an opportunity for acquisition.'
Wade did not comment on rumours that the owners of the potential acquisitions decided to pull out of the sale, but said ITE is still talking to firms.
'We are interested in local firms that service local businesses to be regional offices for us.'
Resellers that have moved from direct to indirect status have to cope with lower margins and could lose customers, Wade said, which means buyers would value them below the price their owners expect. Sources suggest product reseller CSF is pushing Digital to force four of the eight product resellers to become indirect resellers.
Digital has reiterated its pledge to remove some product resellers, despite adding Computacenter to the tier (PC Dealer, 21 March).
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