Matrix forges ahead on acquisition path
Firm said to be in advanced discussions to buy a second distributor
Acquisition-hungry Matrix Communications Group is believed to have set its sights on acquiring specialist security distributor equIP.
Although no deal is yet in place, sources close to the companies have confirmed to CRN that the two firms are "well into negotiations".
One source said the deal could be closed by the first quarter of next year. "The market is still consolidating. There are clearly predatory companies that do have the funds to acquire. This move seems to be in line with other companies Matrix has bought," the source said.
Matrix, which recently acquired distributor Norwood Adam and reseller Bedrock Networks, is also in preliminary discussions about the potential acquisition of VAR Harrier Group.
Jim Stoddart, chief executive of Harrier Group, confirmed that the two companies were in talks but would not comment further. "We are getting on with business as usual," he said.
Some market watchers have questioned Matrix's strategy, claiming there could be conflict. One source said: "Matrix has made some serious acquisitions this year. It seems to be buying both large resellers and distributors, which is a strange direction to be going in."
However, one distributor, who requested anonymity, saw a new trend in the market.
"There will come a point where manufacturers buy up integrators and distributors. Look at Omnetica and Kingston Communications: a vendor/carrier buying an integrator. Matrix is buying up successful companies, and is apparently keeping its management teams separate," he said.
Nitin Joshi, partner at PKF, said: "There has been a marked increase in merger and acquisition activity, which is going to carry on into next year. Distribution will be streamlined.
"Successful niche VARs will be swallowed up by bigger, more profitable resellers. This kind of acquisition would not be surprising. It is a template for the next 12 months."
Kate Hanaghan, research analyst at Ovum, agreed. "There is a lot of consolidation to come in the IT industry. It is not just confined to the channel; it will be happening everywhere," she said.
Neither Matrix nor equIP was available for comment.