One of the underlying trends in the market has been consolidation. If it is not consolidation among manufacturers, then this trend occurs among resellers. At the present time, it is the turn of distributors.
In the space of one week, the industry has seen two massive mergers which will have a knock-on effect on everyone concerned in the UK IT business.
The first - and one which everyone had anticipated would happen - was the merger between US giant Tech Data and Computer 2000. As much as it is painful to admit the two operations compliment each other - after all, that is what everyone says about their merger - it makes common sense to put the two organisations together.
Putting together the strongest European player with an equally strong US partner can only see the two benefit from each other's experience and knowledge. Although it has to be pointed out that it will be interesting to see how the German and US cultures fit together.
So while the industry was digesting this merger, hot on the heels came the move about acquisitive-hungry CHS Electronics and its purchase of Metrologie. Should the industry have been surprised about the move? No is the short answer. Metrologie had admitted it was up for sale last month, so it was only really a matter of time before CHS once again dipped into its ever so deep pockets.
But this acquisition will be handled differently from the Merisel purchase. At the time, it was thought the two operations should be consolidated into one as soon as possible. CHS provided the networking and storage and Merisel was known for its PCs and software. But as anyone will tell you, it was a complete nightmare as different organisations, in terms of structure and culture, will never meet smoothly.
So CHS tried a different tack with its acquisition of Karma by allowing the operation to be run as a subsidiary of CHS. And this seems to have worked out, which is why CHS will use this policy again with Metrologie. By running companies as a wholly owned subsidiary, CHS believes this reduces the amount of disruption when staff find they are working for a new organisation.
Metrologie will be seen as the high-end, value-add side of CHS' business.
Metrologie's jewel in the crown is its Digital franchise, something which other companies have tried to wrestle from it, but without much success.
And don't expect this consolidation to end here. It won't. After all, there is still another distributor which is understood to be on the market - Northamber. As exclusively revealed in PC Dealer (28 January), CHS has been locked into negotiations with Northamber for a number of months, but these discussions had to be temporarily put on hold to deal with the more time-critical pressure of buying Metrologie which took priority. The acquisition of Northamber by CHS is still scheduled to go through, which is expected some time next month.
No doubt CHS will use the same after-purchasing policy and run Northamber as a separate subsidiary so the distributor will be the group's PC specialist arm.
So the worldwide battle for domination is definitely on, with the boundaries between Tech Data/Computer 2000, Ingram Micro and CHS dwindling as we speak. While Ingram is still the biggest in terms of worldwide turnover, with $16.6 billion, Tech Data follows behind with $11 billion, CHS is now there with an estimated $9 billion.
With the Tech Data/Computer 2000 model to create a strong worldwide player, and with CHS buying up the niche players, the pressure must be on Ingram Micro to maintain its lead. It will be down to Ingram to ensure it keeps offering a good service, supply-ing goods on time with the right product set and price, or as it looks over its shoulder it will see there are two companies present which want the top slot.
CHS MAIN ACQUISITIONS
September 1996 After months of speculation, CHS picks up the operation of struggling distributor Merisel, buying the entire operation, except in the US.
January 1997 Acquisition of German distributor, Frank & Walters. Swiss distributor Wyrsch becomes a CHS subsidiary
April 1997 Miami-based firms Dinexim and International High Tech, and Access & Agora in Czech Republic, become the latest buys.
June 1997 CHS enters into component distribution with the purchase of Karma International. In an acquisition spree, CHS buys two companies based in South America and Eastern Europe Ameritech Exports and Atlantis Skupina.
August 1997 Santech Micro Group, a Norway distributor, is bought by CHS.
November 1997 Acquisition of ARC Spain
December 1997 CHS increases presence in Russia with purchase of Merisel CIS, adding to previous purchase of Lampart.
January 1998 The purchase of CompExpress and Via Brasil to create CHS Brazil
February 1998 CHS takes an 80 per cent stake in Hong Kong, Malaysia and Singapore subsidiary of SIS Distribution.
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