Commtech CEO says smaller disties are struggling to make necessary cloud investment as he confirms Arrow sale

Justin Owens describes Arrow as 'natural fit' for Anglo-Irish distributor as it reaches definitive acquisition agreement

The difficulty smaller, independent distributors have in making the necessary investments around cloud has been cited as a major factor in Commtech's sale to Arrow by its boss.

Talking to CRN, Commtech founder and CEO Justin Owens confirmed that the €100m-revenue Anglo-Irish storage distributor has reached a definitive agreement to be acquired by its global competitor.

The deal, which was completed on Friday, remains subject to competition approval and is set to close in Q4.

Owens described Arrow as a "natural fit" for Commtech, whose largest vendors are Dell-EMC and Pure Storage. It also works with the likes of Rubrik, SonicWall and DataCore.

"There are a lot of changes happening in the market," Owens said.

"We are seeing a big move towards cloud, and as an independent distributor it is difficult to make the investment in platforms that is necessary. Putting our business in with Arrow will allow us access to Arrow's vendor portfolio, which is obviously very wide, and also to the investments Arrow has made on a global basis in platforms and cloud and so on. We are very excited about it and think it will allow us to significantly grow the business, both in Ireland and the UK as well."

Founded by Owens in 1997 as a Cisco and Symatec consultancy, 40-employee outfit Commtech moved into trade-only distribution in 2002. It launched a UK office in 2012 and the UK now generates half of its circa €100m sales.

"Arrow has a similar vendor set which makes it a natural fit, plus I think that Arrow themselves are the last of the pure-play value-add distributors, and we would see ourselves in that model," Owens said. "It was obviously a reasonably lengthy process, and we like the people and the culture and felt that our people would fit in very well with theirs."

The Commtech brand will probably be integrated at some point over the next year, Owens said.

"Arrow have a business already in Ireland, which is smaller than ours, so I think it would make sense to put those two businesses together," he said. "Likewise in the UK, it would probably make sense from a marketing and cost perspective to roll out the Arrow brand across the business. Arrow have very good marketing resources themselves, and it would be very useful for us to get access to the collateral and back-end they have in those areas so we can add additional value to our customers."

Arrow has a heritage of snapping up local VADs, swallowing security specialist Computerlinks in 2013 and Sphinx in 2010.

Owens said the agreement with Arrow ties him in for staying on for a certain period of time, adding that the deal will be a good thing for staff.

"There aren't as many opportunities for really good staff at a smaller business to move into more senior roles as there are at Arrow. Our good, long-term staff see it as an opportunity to grow their careers," he said.