Insight to acquire PCM in $580m deal

Insight CEO says the acquisition will bolster its solutions business

Insight is set to acquire US counterpart PCM, in a deal valuing the reseller at $581m (£457m).

Insight will pay shareholders $35 per share, which it says is a 36 per cent premium on PCM's one-month average closing price as of last Friday.

PCM has 40 offices across the US, Canada and the UK, with over 4,000 employees.

Insight CEO Ken Lamneck said: "Over the past five years, Insight has made significant progress, transforming our business from a value-added reseller to a well-respected global solutions provider with deep expertise across technology areas that provide our clients with significant value.

"Together with PCM, we will be even better positioned to capitalise on our solution area investments through the addition of more technical and sales resources and access to thousands of new clients, especially in the mid-market and corporate client segments."

Insight said it expects to save $70m in annual costs by 2021 as a result of the merger, with the majority of this coming within the first 18 months.

It said these savings will come from consolidated IT and delivery systems, real estate and operational integrations.

The acquisition comes after Insight's EMEA boss Wolfgang Ebermann recently told CRN that it would make no sense to acquire a traditional reseller, questioning how long this business model will remain viable.

PCM saw revenue decline in its most recently reported quarter, with sales for the period ending 31 March dropping two per cent to $534m. UK revenue rose 50 per cent to £13.4m in the same period.

The reseller's share price has tumbled by a third since the middle of April, with its market cap just under $300m when the market closed on Friday.

PCM CEO Frank Khulusi said: "This combination offers the ability to provide clients with greater value through the expansive solution offerings of the combined company at a time when customers increasingly need a full-service technology solutions provider to help them transform for the future.

"Together, we will be able to offer an impressive level of breadth, scale, partnerships and services to meet our clients' needs and exceed their expectations.

"On behalf of our board of directors, we are very pleased to announce this combination which we believe maximises our shareholders' value, and we look forward to the resulting opportunities that lie ahead for our employees, customers and vendor partners."