Exclusive Group Acquires $230M Fine Tec To Break Into US Security Distribution Market

Exclusive Group is breaking into the North American market, announcing on Thursday its acquisition of security value-added distributor Fine Tec.

Terms of the deal were not disclosed, but the company said the acquisition brings its combined full year anticipated sales to more than $2 billion. Fine Tec's annual revenues are $230 million.

The acquisition also brings the Exclusive Group, which is a value-added services and technology group focusing on security, to the full global market. The company previously only had a presence in Europe, the Middle East, and APAC.

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"This acquisition now gives us a near-complete global footprint," Chief Operating Officer Barrie Desmond said.

Desmond said Exclusive Group has been looking to expand into the North American market for a few years. He said Fine Tec was the right fit for the company's expansion into the market because it had a similar value-based model, some vendor crossover, and was on a similar growth trajectory. Fine Tec specializes in the value-added distribution of network security, data integrity, and storage.

Fine Tec President and CEO James Shen said the acquisition would allow Fine Tec to take its "value over volume" philosophy global. He said the acquisition would allow Fine Tec to continue on its growth trajectory of more than 30 percent sales growth year over year for the past 10 years.

"Staying local is very hard - we were always looking for ways to go global … That's where this match is coming from," Shen said. "I'm very happy to start the next chapter of our journey."

"I think we will do tremendously much better than when we stood alone," he said. "As they say, you can run fast by yourself, but you can't go further. We can go much further now. We will keep our momentum."

The acquisition comes as many other security channel companies are seeing the value of scale and looking to take their business global. The Kudelski Group, a $1 billion global security solution provider, announced in January that it had acquired M&S Technologies to break into the US market. Optiv Security has said it also plans to make acquisitions to expand its global footprint, though it has not made any international acquisitions to date.

Desmond said having global scale is key to being successful in today's security market. He said the acquisition "fills the gap" for Fine Tec, allowing it to take global deals it previously had to bypass because it didn’t have the reach. He said it would also give Exclusive Group significant reach for the first time into the US market.

"I think we can continue the growth we have seen in previous years… Our vendors are looking for another choice. They respect and appreciate our model, which is slightly different than the rest," Desmond said. Shen said it would also give customers access to more vendor options.

Desmond said Exclusive Group plans to keep the entire Fine Tec team through the acquisition, including Shen. He said the company wants to keep Fine Tec's "entrepreneurial flair" and agility in the local markets. To preserve that, he said Exclusive Group only bought a majority share of 80 percent in Fine Tec, keeping the remainder with the company.

"We don't try to change anything. We build on what's there. That's at the core of our philosophy and our strategy," Desmond said. "We love the business here. It's got a great reputation, a great track record, great people, great leaders, and we're really excited to build on that and continue to invest." Shen said he is also glad to be joining the Exclusive Group team, saying he is in it "for the long haul."

Desmond said the first stage of bringing the two companies together would focus on leveraging the opportunities presented by a combined company, including deals that both companies had to bypass because of a lack of full global footprint. He said the second stage would be to look the both companies' vendor lineup and assess synergies in North America.