Following Ingram Micro's blockbuster buyout of BrightPoint, ChannelWeb caught up with the broadline giant's chief executive Alain Monié to discuss the detail and the wider issues of distribution consolidation in more depth. The Ingram boss was unable to comment on whether the BrightPoint brand is likely to remain in place, but he opened up about the firm's future acquisition strategy and what the future may hold for the channel as a whole.
ChannelWeb: Can you tell us a bit more about the impetus behind the BrightPoint buyout and what it brings to Ingram?
Alain Monié: This is 100 per cent aligned to our strategy that we have been fairly open on sharing with the markets, which is to have a higher proportion of business in high growth areas. Mobility has been identified as an area in which we wanted to invest. Our strategic direction also includes cloud and the datacentre.
Number two is the services piece [which brings benefits] in terms of better margin, more working capital and more stickiness with the customers. BrightPoint is heavily into the logistics business, which is also an area that we have decided to invest in, and it has a global footprint.
Does BrightPoint's presence in new regions give you a beachhead to launch your more traditional distribution business?
The benefits are on both sides. [The buyout] gives us access to its Middle East and Africa footprint, which is a growing area in which we have not invested so far. BrightPoint was in China until the mid-90s, when it decided to pull out. Given our presence in China, it gives them a nice re-entry. There are other regions such as Latin America where we have very good regional activity. That will also open up BrightPoint's ability to capitalise on our infrastructure. It's really cross benefits that we are seeing.
Does the channel as a whole – resellers and distributors – need to invest in higher-margin products and services as traditional computing markets become more challenging?
We are going to look at investing in higher-margin areas. There is always the challenge between doing more of the same and diversifying. As we are now, we already have a very large footprint through traditional distribution.
Is BrightPoint a good example of the type of higher-margin, specialised company that you may look to acquire?
That is the profile of what we would continue looking at. But, on the other hand, this is a large acquisition. We need to make sure that we work on closing the deal. Naturally, we are going to look at closing other opportunities, but the level of activity or aggressiveness may take a different profile in the next 18 to 24 months.
How long do you expect the integration process to take?
The financial accretion will be in full effect in 2014. If we assume we would close sometime this [calendar] year, we would probably factor the majority of 2013 to execute on the integration.
Does this acquisition put you ahead of your big four rivals in the mobility sector?
BrightPoint has definitely been a leader in that segment. As far as the mobility market is concerned, we have a strong proposition. And not only because it was a sizeable, successful player. We had our own mobility business, which was very successful and growing fast. So this puts us in a very strong position.
Tablets and smartphones are sometimes seen as more of a consumer play; how much growth do you see in the enterprise for mobile devices?
It is an obvious mega-trend. All companies are going into BYOD, that is what's driving the success. As Ingram we are very well positioned, bringing the customer base that we have in the SMB space, combining that with BrightPoint's huge success and huge penetration. It is definitely happening and we are in a great position.
How important was it to keep hold of BrightPoint's senior management, such as chief executive Bob Laikin and EMEA president Anurag Gupta?
Our businesses are very complementary. Their expertise in the mobility area is absolutely clear. We are very fortunate that all the senior management have agreed to be part of the new future company. The likes of Anurag (Gupta) in Europe, their CFO Vince [Donargo] and Bob himself are all going to remain part of this team. Now that they have the infrastructure and the backing, they will be able to do things that they were maybe more limited in doing before. It is key that they have accepted.
After some frenetic consolidation from the big four a couple of years ago, activity seemed to quieten down. In light of recent announcements, can we expect an increase in M&A from the big distributors?
It is very difficult to predict and usually nobody comments on what their activity level is. But consolidation has a good chance to continue. This is a business where size and coverage counts – to be effective, to offer reach to the vendors. And so I think we will see continuing consolidation.
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