Synnex CEO says Westcon deal offers 'pathway' into Europe and rest of world
But Kevin Murai says Synnex will probably hold off investing further in Westcon International while its SAP conversion and BPO restructure are still ongoing
CEO of US distribution giant Synnex said that his firm's 10 per cent stake in Westcon-Comstor's EMEA and APAC business will act as a pathway to expand globally.
Synnex announced yesterday its intention to buy Westcon's Americas business for $800m (€711.3m), while also placing a $30m investment in the distributor's international business in EMEA and APAC.
Speaking to Wall Street analysts yesterday, Synnex's CEO Kevin Murai said obtaining a stake in Westcon's international business will act as a "good foundation" for further expansion.
When asked whether Synnex may acquire the entirety of Westcon's international operations, Murai said: "It does give us a good pathway to look at expansion opportunities beyond just the Americas. One thing that Westcon-Comstor has, [that] it was probably one of the first global distributors to be able to launch, was a true seamless global offering. That continues to be a robust part of their overall business.
"By having a minority stake in Westcon-Comstor International, that really provides us with a good foundation to continue to provide that seamless global offering to the customers and to our vendors that require that."
Westcon is still feeling the aftershocks of a painful SAP rollout in its international business.
Synnex has a year-long window from the deal's closure to double its stake in Weston's international business to 20 per cent at the same price as the initial 10 per cent, but Murai said his firm will likely hold off investing further while Westcon's SAP conversion and business process outsourcing (BPO) restructure is still ongoing.
"The Westcon-Comstor business is attractive for a number of reasons to us. But as they are kind of right in the middle of their transformation with SAP conversions and BPO, both companies felt it's best at this point to allow the rest of the business to focus all of their efforts on continuing to get to conclusions - successful conclusion[s] - with that transformation, as well as drive their business. So, from a timing perspective, we just felt that it was better for us to acquire the Americas business now and then just provide us with a pathway on looking at the international business at the right point in time," he said.
After the deal was announced, Jens Montanana, CEO of Westcon-Comstor's current owner Datatec, conceded that the buyout "didn't come at an optimum time" for the company, as Weston is still struggling with complications stemming from its SAP rollout and its impact on the firm's financial performance.
Murai claims that the combination of Synnex's sales and the acquired Westcon sales for the 12 months until February 2017 produces revenues exceeding $16.5bn. He also said that, while Westcon has, of late, produced revenues that are flat or in slight decline, Synnex expects to return the business to sales growth in the future.