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Synnex Expands Distribution Business with Acquisition of Westcon-Comstor Americas

By Lynn Haber
June 06, 2017 - News
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**Editor's Note: Please click here for a recap of the biggest channel-impacting merger and acquisition news from April.**

Lynn HaberDistributor Synnex Corp. announced on Tuesday a definitive agreement to acquire value-added distributor Westcon-Comstor's Americas and Latin America business in a $600 million deal. This includes the U.S., Canada and Latin American markets, as well as a 10 percent international investment in Westcon-Comstor EMEA and APAC businesses.

This acquisition not only strengthens Synnex’s position in North America but also expands the distributor’s footprint in Latin America – and with the EMEA and APAC business agreement – creates a global business opportunity for partners. The complementary business transaction will add $2.2 billion of revenue and profit margins to Synnex as a result of this process, the company stated.

“This transaction supports our strategy of shifting our business to where technology is headed," said Kevin Murai, president and CEO of Synnex, in a prepared statement. Westcon-Comstor brings to the table a solid position in the security, UCC and networking markets, which are complementary to Synnex’s portfolio, he added.

PartnerPath's Diane KrakoraDiane Krakora, CEO of PartnerPath, the partnering development consulting company, isn’t surprised to hear about the acquisition, having seen several other operationally driven acquisitions over the last couple of years.

“The distributor business value proposition is getting tougher as the industry moves to cloud consumption models. It’s good for Synnex and Westcon as they get economies of scale and additional reach by combining efforts," she told us.

From the partner perspective, there’s a bit of a negative impact when there’s less competition for their business.

“They will have fewer options for distributors, which means they will be a bit more beholden to the few left standing. And, with acquisitions, change is inevitable and that always brings uncertainty to the channel partners, as they have planned the next three years of their business-model growth on the current market situations," Krakora said.

At the same time, assuming there’s significant overlap in the partners that have relationships with both organizations, partners will have more access to products and services from the combined strength of Synnex-Westcon, she added.

Given the scope of its business, Synnex says there will be some level of overlap in partners and customers; however, given the specialty business of Westcon-Comstor, which sells into the high end of communications security, the transaction will result in a number of net-new customers for Synnex.

Seventy-seven percent of Westcon-Comstor’s $2.2 billion FY2017 revenue is generated in North America, and 23 percent in Latin America. Forty-eight percent of North American and Latin American revenue is driven by security sales, 32 percent Cisco sales, 15 percent UCC sales, and 6 percent other, according to information provided by Synnex.

Murai addressed the complementary nature of the two distributors' markets by ...

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