Ingram Micro potential sale: Three key talking points
We chew over the main takeaways from the news that Ingram's Chinese parent is in discussions to offload the world's largest distributor
HNA publicly admitted it is in preliminary talks to sell Ingram on Christmas Eve. Here we chew over the key takeaways for partners
Ingram's Chinese escapade may soon be over
When HNA announced its blockbuster $6bn deal for Ingram in February 2016, it was hailed as a potential watershed moment for the IT industry as the world's largest tech distributor geared up for Chinese ownership.
But HNA's statement on Christmas Eve suggests that the Chinese conglomerate's near three-year association with Ingram may turn out to be no more than an interlude in the distributor's 40-year history.
Although the California-based broadliner appears to have fared adequately under HNA's tutelage (Ingram's 2017 revenues pogoed 11 per cent to $46.7bn) the deal was plagued by delays and took nigh-on a year to gain approval. Rumours that HNA was looking to offload its quarry as part of a wider asset sale surfaced just 13 months later, in January 2018, with fellow US distributor Synnex fingered as the suitor.
At the time the takeover was first unveiled, lines of diplomacy between the US and China were arguably more open than ever, whereas now the two most powerful nations on earth are in the midst of a trade war.
Whether rising tensions between Washington and Beijing had any influence or not, HNA's efforts to offload Ingram certainly gel with the current geo-political direction of travel.
In truth, despite the initial fanfare, hopes that Ingram's potential would be super-charged by its association with a Chinese logistics giant have yet to be realised. Now it seems its Chinese adventure may be over, before it really got going.
Ingram tip of asset sale iceberg for debt-laden HNA
HNA confirmed to the Shanghai stock exchange on 24 December that "due to changes in market conditions and the company's strategy, the company is in talks with a concerned party on selling Ingram Micro".
According to both Reuters and the Wall Street Journal, who reported three days earlier that HNA is in talks with Apollo, HNA is seeking a $7.5bn price tag, including $1.5bn in debt, for the distributor.
But Ingram is by no means the only item in debt-laden HNA's jumble sale as it looks to unwind a $50bn international acquisition spree and refocus on its core business.
According to this Reuters article, HNA has already sold off $43.6bn of assets this year, including real estate and stakes in hotel groups.
According to the article, the asset sale also comes amid a crackdown by China on aggressive deal-making firms.
Ingram's reported suitor has a track record in tech
Apollo Global Management may not be the first name that springs to mind when it comes to tech firms undergoing PE takeovers, but multiple reports have picked it out as a leading candidate to buy Ingram. According to the WSJ, Apollo is in talks with HNA after seeing an initial bid rebuffed two weeks earlier.
However, Apollo does have a pedigree in tech, most notably with hosting provider Rackspace, which it acquired in 2016 and currently owns.
US IT solutions provider Presidio is among its other recent investments.
Although Apollo's main business is credit, it bills itself as an "established leader" in private equity, with 150-plus portfolio companies across sectors that include financial services; business services; consumer services; chemicals; natural resources; consumer and retail; leisure; manufacturing and industrial; and media, telecom and technology.