CHS Electronics will merge with Merisel UK and possibly other Merisel Europe subsidiaries by the end of the month if both companies sign an updated deal.
PC Dealer exclusively revealed in April that CHS hoped to take over Merisel.
CHS responded to Merisel's request for a partner, made via financial advisor Merill Lynch (PC Dealer, 24 April). Negotiations have now reached an advanced stage, sources say, after a two-day meeting at Merisel and a CHS US board meeting which discussed the move last Friday.
One senior industry source said CHS and Merisel executives were 'locked in meetings last Tuesday and Wednesday' in the US. 'They are thrashing out how to integrate product lines.
'The problem CHS has is how to run Merisel Europe at a profit if it buys the whole thing - it will need to service the debts and bring the companies together, which always costs money. Buying is simple. It is a horror story afterwards.'
Another source said: 'I have been told they will make a company of about u350 million turnover, about the same size as Frontline or Ingram Micro.
They have good names and product bases, but the only question is how they will run the joint organisation.'
CHS Merisel could be the name of the merged distributor, the source predicted, with CHS as the hardware arm and Merisel or Softsel as the software division.
CHS emerged ahead of other possible US partners including electronic components distributor Arrow Electronics, IT rivals Computer 2000, Tech Data and Ingram, and acquisitive UK rivals Specialist Computer Holdings (which owns distributor ETC) and Datrontech. A CHS insider said the deal is likely to go through after high-level discussions in the US.
Jan Lawford, UK sales and marketing director at CHS, was unaware of what progress has been made by the negotiations. 'In the UK we have had no further discussions with Merill Lynch since the initial contact,' she said.
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