ScanSource To Acquire Brazilian Distributor, Eyes U.K. Company For Next Buy

Business is booming at ScanSource as it continues its global expansion with a recent agreement to acquire a distributor in South America and a notice of intent to acquire another in Europe.

ScanSource, the large stateside distributor of specialty technology products focusing on point-of-sale and barcode communications and physical security solutions, said recently it planned to acquire the Brazilian distributor Network1 and disclosed last week additional plans to acquire U.K.-based Imago Group.

ScanSource said in a press release it would expand its communications business in Latin America through its planned buy of Network1. As part of that, ScanSource will acquire all of Network1’s operations throughout Latin America, including Brazil, Mexico, Colombia, Chile and Peru. The South American distributor’s net sales for calendar year 2014 are estimated to be $374 million. The deal is expected to close by the end of the year.

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Network1, located in Sao Paulo, Brazil, has demonstrated double-digit sales growth, which is projected to continue during the four-year earnout period, according to ScanSource. It offers a broad portfolio of communications solutions, including unified communications and collaboration, networking and performance, data center and virtualization, cloud, logical security, infrastructure and physical security.

’We entered the Brazilian Barcode and POS market in 2011 with the very successful acquisition of CDC Brazil, the region’s largest Barcode and POS value-added distributor,’ said Mike Baur, CEO of ScanSource in a press release. ’We have been looking for the right opportunity to complement and expand our successful Brazilian growth business with the addition of communications products in that geography.’

ScanSource, based in Greenville, S.C., also said it executed this month a letter of intent to acquire the Imago Group, with sales for fiscal 2014 reported to be approximately $83 million.

Ian Vickerage, Imago founder and managing director, will stay in his current role and lead the management team following the completion of the acquisition. It will continue to operate as a separate business unit as part of ScanSource’s video, voice and data strategy in Europe.

ScanSource would have nearly 400 employees following completion of the Imago deal.

Mike Ferney, president of worldwide communications and services for ScanSource, said this is a great development for their many partners in the channel.

’In general, an acquisition like this one will provide our resellers with an expanded offering. … Today in the US. we are probably the dominant video conferencing distributors,’ he said, ’and what this acquisition really does is expand our geographic reach so we have a platform already.’

NEXT: Imago To Bolster ScanSource's Offerings

Imago provides a full suite of value-added services in video, voice and data, including project initiation, implementation and training, as well as a strategy in assisting resellers with implementing cloud solutions via public, private or hybrid means. The proposed Imago acquisition is expected to close in the third quarter, according to ScanSource representatives.

The Imago deal is expected to help strengthen both companies, Ferney said.

’Today, in the U.S., we are very strong in voice, video and networking,’ he said. ’In Europe, we were not as strong in video so this strengthens us in the video conferencing space.’

ScanSource reported last week net sales for the quarter ended June 30 up about 6 percent from the year-ago period to $758.1 million. GAAP net income was $27.1 million for the quarter, which equated to $0.94 per share. Net income, excluding charges, totaled $17.3 million for the quarter, or $0.60 per share.

Patrick Fuzer, business development director of Branchburg, N.J.-based Atrion Communication Resources, said his reseller business has partnered with ScanSource for some time and the acquisitions have him excited for where the partnership could grow from here.

’They’re getting stronger,’ Fuzer said. ’We do a good deal of business with some of the bigger pharmaceuticals who have many locations across the globe, so anything that can make it easier to get that technology where it needs to be is a really good sign of growth.’

PUBLISHED AUG. 26, 2014