Nearing the Finish Line: Blockbuster Ingram Micro-Tianjin Tianhai Deal Receives Critical U.S. Antitrust Approval

Chinese logistics firm Tianjin Tianhai's $6 billion acquisition of Ingram Micro has been green lighted by U.S. antitrust officials, successfully avoiding the most likely pitfall to potentially trip up the deal.

The Irvine, Calif.-based distributor announced Tuesday that the Committee on Foreign Investment in the United States (CFIUS) has given both parties clearance to proceed with the transaction, keeping things on track to close by the end of 2016.

Wall Street has responded very favorably to the news, with Ingram Micro's stock climbing 3.3 percent in pre-market trading Tuesday to $38.44 per share. That’s just 1.2 percent below Tianjin Tianhai's offer of $38.90 per share, with the small gap between the offer price and the current trading price reflecting a high degree of confidence among investors that the deal will be allowed to close.

[RELATED: One Step Closer: Ingram Micro Shareholders Greenlight Sale Of Company To Tianjin Tianhai]

Ingram Micro's stock has not traded at more than $38.00 per share since December 1998. For much of the time since the February announcement of Tianjin Tianhai's acquisition plans, the gap between Ingram Micro's current stock price and Tianjin Tianhai's offer price was close to 10 percent, reflecting concerns that the deal could trouble antitrust officials.

The two companies initially declined to undergo the CFIUS process, but changed course in July after consulting with CFIUS. U.S. antitrust officials have grown increasingly wary in recent years of Chinese ownership of U.S. technology assets, with Chinese-backed acquisitions of Western Digital, Fairchild Semiconductor, Phillips and Micron all scuttled in the past year due in part to CFIUS-related concerns.

The Ingram Micro acquisition was considered to be a somewhat more palatable to U.S. authorities since it wouldn't result in any intellectual property ending up in Chinese hands, along with the fact that Tianjin Tianhai isn't owned by the Chinese government. Still, observers were concerned that Ingram Micro's book of partner-led business with the U.S. government could complicate matters.

However, Ingram Micro and Promark -- a public sector-focused subsidiary acquired by Ingram in 2012 -- do not hold contracts or sell products through its General Services Administration schedule that require a security clearance. Conversely, all of the products sold through Ingram Micro's public sector and GSA businesses are entirely commercial in nature.

Ingram Micro also announced Tuesday that the deal has received clearance from the antitrust authorities in Austria, Italy, Poland and Slovakia. The acquisition is still subject to approval from China's State Administration of Foreign Exchange (SAFE); the two companies filed paperwork with Chinese governmental authorities on March 18.

Ingram Micro's shareholders approved the deal in June, with more than 99.8 percent voting in favor of the acquisition, with 0.1 percent voting against and 0.06 percent abstaining. Ingram Micro would be the only one of North America's six largest IT distributors to be privately held should the deal go through.

If the deal closes, the $43 billion Ingram Micro will become part of the HNA Group, a $29 billion Hainan, China-based conglomerate that owns other transportation and shipping entities such as Hainan Airlines, China's fourth-largest airline.

Ingram Micro has said that it would operate as a standalone entity with little interference under HNA; all of the distributor's top executives remain with the company, except for former President and Chief Operating Officer Paul Read, who stepped down from those posts days after the deal was revealed in February and left Ingram Micro in September.

The proposed acquisition is the first of two seismic changes to hit the North American IT distribution landscape this year. Tech Data – Ingram Micro's top broadline competitor – announced last month that it plans to acquire the Technology Solutions (TS) division of Avnet for $2.6 billion, propelling itself into the data center-focused specialty distribution business.