PC components distributor Karma International has admitted it is up for sale and involved in talks with several companies to try to secure further investment.
Acquisitive CHS Electronics has emerged as the favourite to buy Karma as the broadline distributor wants to strengthen its position in the systems builder market.
Alvi Mazon, MD of Karma International, confirmed that a merger was one of the routes it was considering to fuel growth from an $808 million to a $1.25 billion organisation.
He said: ?We want to have access to capital. If we float it will take about 18 months, but if we merge it will be much quicker than that. CHS is one of the companies we are talking to.?
Ron Golan, managing director of Karma UK, said: ?Karma is negotiating with a few companies and a few banks as we are looking to float or merge. We are talking to some of the big boys in distribution ? CHS may be a possible partner.?
?Talks have been going on for about three months,? said one source. ?CHS needs a low-cost model for components so Karma would get it there.?
Another source said: ?It does make sense. There are eight or nine countries where Karma is very strong and storage is a good business to be in.?
But sources said there was potential for conflict between the two distributors? storage suppliers, as CHS sells Seagate and Karma is tied in with Seagate?s main rival, Quantum. One source said: ?I think CHS has got enough on its plate already with the integration, without going and buying something else.?
Last week printer manufacturer Brother revealed that it had ditched CHS UK as a distributor by mutual agreement. The move comes one month after D-Link also parted company with CHS.
Claudio Osorio, chief executive officer of CHS, remained tight lipped, saying: ?As CEO of a public company I can?t comment, but Karma is a wonderful company.?
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