European systems integrator Getronics has acquired MSP heavyweight Pomeroy, No. 43 on the 2018 CRN Solution Provider 500, in a deal that creates a $1.3 billion solution provider behemoth with 9,000 employees and coverage in more than 110 countries.
Terms of the deal were not disclosed, but the acquisition was made possible by an $815 million financing and recapitalization.
The acquisition marks a return to the North American market for Getronics, which ten years ago sold its North American assets to CompuCom.
The deal provides a big payday for private equity firm Clearlake Capital, which has owned Pomeroy for the past five years.
"Clearlake deserves a lot of kudos, they created a lot of value with Pomeroy," said Martin Wolf, president of martinwolf M&A Advisors of Walnut Creek, Calif., one of the top channel investment advisory deal-makers. "Clearlake has done very well for the shareholders by using debt properly. They did smart things and they have been handsomely rewarded."
Wolf said the deal gives Getronics the product muscle to serve its European customers in the U.S. market. "The accounts Getronics has in Europe have product needs in the U.S. and Pomeroy has access to those products," he said. "This is low-hanging fruit for Getronics, creating cost efficiencies and synergies to serve global accounts."
Wolf said he expects to see more deals involving enterprise solution providers in the midmarket. "Companies in the middle have to decide if they are going to get bigger themselves or focus on something that is more protectable," he said.
The channel has prospered over the past year with the cloud transformation driving product refreshes and on-premises to cloud migrations, said Wolf. "That has created a lot of services opportunites for VARs," he said.
Getronics Chairman and CEO Nana Baffour said the deal allows the systems integrator to achieve its goal of becoming a billion-dollar company two years earlier than originally planned.
“This reflects the power of our dreams and the dedicated execution of our team and financial partners, and we are excited about the value and customer experience that the new combination will allow us to deliver," he said. "Our operations are now significantly strengthened globally, extending from Brazil to Singapore and from Spain to the U.S. and Canada, with over 2,800 active clients."
Brian Robinson, current CEO of Pomeroy and global CFO of the newly combined company, called the deal an "incredibly exciting event" for Pomeroy customers.
“Getronics’ global service delivery capabilities and service offerings will be a compelling added value for North American clients," he said. "We look forward to introducing Getronics’ Applications, Cloud and Unified Communications solutions to further enable our clients to transform their businesses utilizing the latest digital tools as part of the workspace of tomorrow.”
CPPIB Credit Investments, a wholly owned subsidiary of Canada Pension Plan Investment Board, Permira Debt Managers and White Oak Global Advisors, led a $550 million "first lien senior tranche" round of financing as part of the transaction.