Ingram Micro To Buy $300M Brazilian Distribution Powerhouse

Ingram Micro notched its seventh acquisition of the past year, buying a $300 million Latin America distributor with expertise around applications, software and services.

The $46 billion Santa Ana, Calif.-based distributor said its proposed purchase of Sao Paulo, Brazil-based Grupo Acao will create cross-selling opportunities in Brazil, where Ingram Micro is already one of the leading distributors.

"Latin America is a region where we continue to see significant opportunity," Mike Zilis, an executive vice president for Ingram Micro, told CRN. "It fits right into the wheelhouse of our primary strategy."

[Related: CRN's Mergers and Acquisitions News Page]

Terms of the deal, which is expected to be completed late in the fourth quarter of 2015, were not disclosed. Acao is expected to provide $300 million of sales and modest profits for Ingram Micro in 2016.

Acao works closely with EMC, IBM, Oracle, Red Hat and VMware across technology areas spanning from hardware and storage to software and virtualization. Ingram Micro works closely with those vendors in other parts of the world, Zilis said, but does not have a significant relationship with them today in Latin America.

The distributor also has a robust services practice, Zilis said, addressing everything from basic engineering and sales support to integration and delivery to channel financing for infrastructure-heavy projects.

Acao operates in seven South American countries -- Argentina, Brazil, Chile, Colombia, Ecuador, Peru and Uruguay -- and has between 201 and 500 employees, according to LinkedIn. Zilis expects Acao to benefit from Ingram Micro's global reach, tools and financing capabilities.

Ingram Micro's stock price increased 0.4 percent to $29.15 per share in after-hours trading. The acquisition was announced after the market closed Tuesday.

Although the Acao acquisition will primarily benefit Ingram Micro's existing partners in Latin America, Zilis expects to see some spillover effect for resellers in the U.S. and Canada. North American partners are getting more opportunities to service multinational partners with operations in Latin America, and Zilis said Ingram Micro's expanded presence should make it easier for them to do that.

"The IT world is becoming more and more global," Zilis said.

Ingram Micro sees Latin America as a significant spot for both short-term and long-term investment despite the recession in Brazil and economic volatility in other parts of the region, Zilis said. Ingram Micro, though, sees the market downturn as cyclical, and expects a pronounced economic uptick down the road.

"This continues to be an emerging market," Zilis said. "But we're in this for the long term."

The Acao deal follows Ingram's March acquisition of Tech Data's Peru and Chile business for an undisclosed amount. But despite Tech Data's departure from Latin America – the distributor also exited its business in Uruguay earlier in the year – Ingram Micro still faces fierce competition in the region from Arrow, Avnet and Westcon, as well as other local and regional distributors, Zilis said.

In addition to buying Tech Data's Latin American business, Ingram Micro has made the following moves: Netherlands-based e-commerce fulfillment business Docdata earlier this month; mobile life-cycle services companies Canai Group of the U.K. and Clarity Technology of Portugal in June; Aptec Saudi Arabia, the country's largest distributor, in June; Armada, Turkey's largest value-added distributor, in December; and Paris-based reverse logistics provider Anovo in November.

The distributor plans to continue keeping its eyes open and looking at different acquisition possibilities in Latin America, Zilis said.

Opening up the South America market could be particularly valuable to North American partners who sell cloud, according to Guy Baroan, founder and president of Baroan Technologies in Elmwood Park, N.J. That's because the continent continues to be very hardware-centric.

The distributor's activity in Latin America also extends to solution providers, Baroan said, with the Trust X Alliance, Ingram Micro's elite partner community, currently forming a chapter in Brazil. This will be Ingram Micro's second Trust X chapter located outside North America. Tthe other is in the United Kingdom.

"South America is a big place," Baroan said, "so Ingram having a foothold in these countries is valuable."

PUBLISHED OCT. 20, 2015