Systemax To Sell Its French Business, Return To Its Industrial Roots

Global solution provider Systemax on Tuesday said it has agreed to sell its France-based solution provider business to Bechtle AG.

The definitive agreement, under which Neckarsulm, Germany's Bechtle will purchase Systemax's French business, was unveiled at the same time Port Washington, N.Y.-based Systemax announced its financial results for its second fiscal quarter 2018, which ended June 30.

With the sale, Systemax will return to its roots as a provider of industrial supplies and maintenance, repair, and operations services, the company said.

[Related: Blockbuster Deal: PCM Buys North America Systemax B2B Business, TigerDirect Brand]

The firm earlier this month unveiled receipt of a negotiated irrevocable binding offer from Bechtle for Inmac Wstore, its France-based solution provider business.

Systemax has been going through a multi-year process of shedding many parts of its solution provider business.

In March 2015, Systemax shuttered its retail business after difficulties in the consumer business, and at the time unveiled plans to close nearly all of its retail stores.

That was followed in November of 2015 by a deal for Systemax to sell its North American business-to-business operations, including its TigerDirect brand, to El Segundo, Calif.-based PCM. The company also laid off about 500 employees after the PCM deal.

After legal issues surrounding a couple members of its executive team, Systemax in 2016 elevated Larry Reinhold, who had been serving as the company's chief financial officer, to the role of president and CEO.

Systemax, which was listed as the 17th largest solution provider in the 2015 Solution Provider 500, had fallen to number 30 in the 2017 Solution Provider 500, and was not listed in the 2018 Solution Provider 500.

Systemax did not reply to a CRN request for further information by press time.

Reinhold, in a prepared statement, said Systemax's French business saw year-over-year revenue growth of 11 percent and a 28-percent growth in operating income, and that his company believes Bechtle will be a good home for its French business, employees, and customers.

"Upon closing of the transaction, we will be solely focused on the growth of Industrial where we are making further investments to enhance its competitive position, expand the value we bring to our customers and position it for further success. Industrial is a terrific business that has significantly expanded its operations, improved its profitability and has multiple growth opportunities," he said in that statement.

Specific terms of the sale were not unveiled. However, Systemax said its France-based business, as of June 30, had an enterprise value of about $246 million and an equity value including net cash on hand and other adjustments of about $270 million. The company expects to recognize a pretax book gain of between $182 million and $188 million on the sales, with total cash after taxes available to U.S. shareholders from the transaction amounting to between $238 million and $248 million.

For Systemax's second fiscal quarter 2018, the company reported revenue of $363.1 million, up from $313 million for the same quarter of 2017.

Net income on a GAAP basis for the quarter was reported at $17.8 million, or 47 cents per share, down from the $19.3 million, or 52 cents per share it reported last year. On a non-GAAP basis, the company reported net income of $18.1 million, or 48 cents per share, up from the $14.9 million, or 40 cents per share, it reported last year.