CHS gains ground in German merger deal

The $37 million acquisition of Frank & Walter has made the distributora force to be reckoned with in the German market

CHS Electronics has bought German distributor Frank & Walter in a deal worth about $37 million.

The German firm was owned exclusively by one of its founders, Carsten Frank, who has received 2.2 million CHS shares and will become CHS European vice president. The deal makes Frank the second largest CHS shareholder worldwide and the largest outside of Miami.

Combined with its recent acquisition of Merisel's German arm, this will give CHS' German interests a combined turnover in excess of DM2 billion, threatening to knock market leader Computer 2000 from the top.

Craig Toll, CHS chief financial officer in Miami, was in bullish mood when asked about the deal. He said: 'The merger with Frank & Walter will make us the largest distributor in Germany and give us the market presence we need to get better economies of scale. Frank & Walter concentrates its marketing efforts on small customers, so we will be accessing a new customer base. Frank & Walter doesn't carry a lot of the name-brand products we have to offer, by adding those products to their portfolio we will improve their results.'

The Frank & Walter name will be kept intact, according to Ralf Hinrichs, a representative of the distributor. 'The brand will not be changed until at least the end of 1997,' he said. 'It is too well known in Germany for CHS to want to lose it straight away.'

This could lead CHS into conflict with existing vendors. Last year, Rodney Davies, general manager of Packard Bell-NEC, issued a warning about CHS maintaining the Frank & Walter brand when news of the acquisition first broke.