Online reseller Insight has decided to scrap its German arm to concentrate exclusively on its UK presence. The US firm bought UK-based online reseller Action for £27m in cash earlier this year.
David Palk, managing director of Action and now president of Insight Europe, told vnunet.com's sister publication Computer Reseller News at the time that the Action name would eventually disappear under the Insight Global brand once the deal was finalised. The German division will close by the end of the year.
Timothy Crown, chief executive at Insight, said in a statement: "The acquisition of Action has made Insight the fifth largest reseller and the largest direct marketer of IT products in the UK.
"We are committed to capitalising on our increased presence in this market by focusing our investments and management efforts in the UK.
"We feel it is not in our stockholders' best interests to continue losses in Germany while we direct our resources almost exclusively to the UK operations."
The company is to take a non-recurring charge - which includes potential impairment of goodwill, severance costs and liquidation of assets - relating to the closure, in its fourth-quarter 2001 results.
Tony Price, managing director of rival online reseller WStore, said the company still has a lot to do before it becomes a real threat to its competitors.
"The only reason a company is closed down is because it is not successful enough, which is obviously what has happened in Germany," he said. "Action is one of our closest competitors, but this announcement doesn't really bother us at the moment."
But once Action and Insight have fully merged and combined their IT systems properly, the new company is "going to be a problem for everyone", Price said.
Infrastructure provider says international sales now make up 51 per cent of its revenue
Suzanne Chappell of TMS plans sailing venture after selling Oxfordshire-based TMS to acquisitive Chess
Withdrawal of credit insurance by some providers a 'reflection' of current challenge facing IT sector, according to MD Steve Soper
SMART's UK managing director joins Lenovo to boost SMB business