Ingram Micro Acquires Portion Of Tech Data's Latin America Business

In a deal between two distributor behemoths, Ingram Micro has picked up part of Tech Data's Latin America business, the two companies revealed Wednesday.

In the deal, Ingram picked up Tech Data's Peru and Chile businesses for an undisclosed amount. Tech Data said it also plans to exit its business in Uruguay.

The addition provides reach and scale to Ingram Micro's existing operations in the countries, the Santa Ana, Calif.-based distributor said. "This acquisition is an excellent complement to our existing operations in Latin America," Ingram Micro CEO Alain Monie said in a statement.

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Ingram Micro has been making a global push recently, with a number of acquisitions to expand its reach around the world. Most recently, it acquired Paris-based logistics provider Anovo, as well as a majority interest in Turkey-based distributor Armada.

Ingram expects the deal will add $270 million in sales in the region, which it said is one of its "top performing" regions. For the full year ended Jan. 3, Ingram Micro announced sales in the region of $2.3 billion, with operating income of $46.1 million. While only a fraction of the company's total earnings, the region had slightly higher operating margins than other regions, at 1.86 percent.

"Latin America is consistently one of our top performing regions and the addition of these businesses to our current operations in Peru and Chile further reinforces to our customers and vendors Ingram Micro's established position and commitment to providing world class, supply-chain and technology services in emerging markets," Monie said in a statement.

David DeCamillis, vice president of sales and marketing at Denver-based Platte River Networks, said in an email that he isn't surprised by the move by Ingram Micro as he has seen the distributor, which he is a partner of, dedicating staff to the region with its cloud and VentureTech Network.

"It's a growing market with lots of opportunities," DeCamillis said.

Tech Data CEO Bob Dutkowsky said in a statement that the sale is part of a bigger plan by the Clearwater, Fla.-based distributor to focus on more profitable and higher-growth areas of the business. Over many years, he said the three countries had proven "difficult to achieve the necessary scale to consistently generate acceptable levels of profit and return on invested capital."

"After careful consideration, we concluded that exiting these operations was in the best interest of our business and our shareholders," Dutkowsky said in a statement. "As we have said throughout the last year, fiscal 2015 and 2016 are market and operationally-focused years for Tech Data. These moves are consistent with our approach of aligning the resources of the Company with more profitable, higher-growth areas of our business."

While Tech Data doesn't break out Latin America sales from the rest of the Americas, total Americas sales for its third quarter, ended Oct. 31, were $2.6 billion, an increase of 3 percent year-over-year. Operating income for the geography was $42.2 million, down 20 percent over the year before.

A Tech Data spokesperson said the sale is an opportunity for it to focus on its Latin America investments around key areas in the region, particularly its export operations in Miami, and established IT operations in Mexico. He said Tech Data plans to expand its operations in Mexico and funnel investment and development efforts into its Miami operation. Tech Data declined to comment on the revenue or percentage the Chile, Peru, and Uruguay regions represent of its total Latin America business.

"The company remains fully committed to these businesses -- and on serving its customers and vendor partners in these growing areas," the spokesperson said in an email. "These actions are consistent with the company’s strategic approach of aligning its resources with more profitable, higher-return markets and areas of business.’

PUBLISHED MARCH 18, 2015