First Ingram, now CHS

First Ingram, now CHS

One of the world's largest computer distributors has followed Ingram in consolidating a presence in Australia with the announcement by Computer Hardware Australia (CHA) that it has been acquired by the US-based CHS Electronics.

Roger Bushell, managing director of CHA, confirmed to ARN that he and his partners - Steve Sampson and an undisclosed third party - had sold 100 per cent of the business to the $US1 billion-per-month global distributor which is listed on the New York stock exchange.

After CHS had perused several local operations, an in-principle agreement was signed with CHA which sees the overseas organisation slated to take control in two years.

Current management will remain for three years. According to Bushell, the final purchase price of the sale will not be decided for two years and has "a large component of performance in it".

CHA recorded a turnover "in excess of $120 million" in the 12 months to December 31, according to Bushell.

"Our situation was that if we didn't become part of a global organisation then we would have to compete against them," he said.

"This deal suited us. It gives CHA the opportunity to retain its own identity in the local market yet still benefit from being a part of a global environment."

There will be no immediate change in the focus or product range of CHA, Bushell said. He claimed through consolidation of national operations, the company has become Australia's largest distributor for both Acer and Toshiba and it has been doing well in Compaq's soon-to-be-restructured multi-partner channel.

Currently preparing its presentation to Compaq, CHA is aiming to secure one of the distribution slots in the vendor's channel structure revision. Bushell feels the guarantees and presence of a respected corporate identity such as CHS allows CHA to bring more bargaining chips to that negotiating table.

"We are there [a Compaq distributor] at the moment, but we also really want to stay there," Bushell said.

"CHS is not pushing us to chase any new deals, but we will look at them as they come up and would be expected to do so."

Courting for a route

Interestingly, CHS Electronics is HP's largest distributor globally, according to Bushell, "but that doesn't mean HP are going to ring us tomorrow and lay it all on the table", he said. "I'm not hanging out to sell everything to everybody anyway. I have loyalties to the relationships I have with our long-time suppliers."

Bushell claimed several overseas distributors - including Ingram - had been courting CHA since about August last year seeking a route into the Australian market.

The partners spent three months weighing the pros and cons of the proposals before going with the CHS offer because "it allowed us to retain autonomy", Bushell said.

"Having bought Victoria's oldest distributor in October 1997, our timing appears to have been perfect," Bushell said. "After consolidating national operations about six months later, we started receiving approaches from global distributors soon after."

Exit strategy

He insisted, they (the three directors) hadn't really been looking to sell the business. "Obviously we had an exit strategy for later on, but it came earlier than we thought."

Bushell said resellers can eventually expect "increased product range, improved customer services and better credit facilities" from the CHS takeover but promised CHA would "remain 100 per cent an Australian-cultured company".

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