DCC sells Altimate to Arrow ECS
Pan-European Symantec, IBM, NetApp and Oracle distributor says its sale will allow it to meet industry challenges
Consolidation of the UK and European distribution skyline has continued with the news that global giant Arrow ECS is set to acquire regional powerhouse Altimate Group for €48.1m (£40m).
Storage, server and security distributor Altimate operates in eight countries in western Europe, including the UK and Ireland, where its presence is based on its 2010 acquisition of Symantec distributor Codework.
Arrow ECS is to acquire a 100 per cent stake in the firm from current parent DCC Group, which owns several other distributors under its Sercom brand.
In a Stock Exchange announcement, London- and Ireland-listed DCC revealed the transaction had an enterprise value of €48.1m, of which €41m is payable in cash. The remaining €7.1m relates to the "deferred acquisition considerations" of Altimate that Arrow will take on.
DCC chief executive Tommy Breen stressed that his firm remains committed to its remaining IT distribution interests, which include Micro-P and Gem in the UK.
"The disposal of Altimate is consistent with our strategy to concentrate the focus of DCC SerCom's distribution activities on its retail and reseller distribution businesses, which have strong leadership positions in Britain, Ireland and France and significant opportunities for further organic and acquisition growth," he said.
The deal will also see DCC swallow an exceptional loss of €8m relating to Altimate's goodwill.
The acquisition is subject to approval from the European Commission, until which time the two companies must remain competitors.
Founded in 1994, Altimate is one of western Europe's last remaining regional distribution players with revenue of €257m and a database of 2,500 resellers. The group has vendor franchises with the likes of Symantec, Oracle, NetApp and IBM.
Patrice Arzillier, chief executive of Altimate Group, argued that selling up to Arrow was the best choice for a brand that grew 20 per cent last year.
"It will allow us to meet the challenges of our industry," he said. "But more importantly, the culture of values at the heart of both our companies, and our complementary resources, will create winning synergies to benefit our partners, whether suppliers or resellers."
John Toal, UK country manager of Avnet Technology Solutions, said the deal would have relatively little impact in the UK because Codework was a fairly small part of the wider group.
"It has been a relatively quiet 18 months [for M&A] and this is the first decent-sized deal that has come along for a while," he said.
Andy Gass, vice president Tech Data, south and west Europe, said: "This shows a continued trend towards consolidation in the distribution sector. I believe this is a trend that is going to continue."