Continuing its aggressive international expansion strategy, wholesale computer distributor CHS Electronics yesterday said it will purchase the Vobis AG retail, assembly and distribution group from German retail powerhouse Metro AG in a $US320 million deal.
The move is the latest in a series of acquisitions by US-based CHS, which this year purchased or announced the intention to purchase companies in Europe, Asia and Latin America. CHS has announced between 15 and 20 acquisitions this year, said Craig Toll, chief financial officer at CHS.
CHS said with the Vobis acquisition, which still requires approval by European regulators, will strengthen its private label business and its overall position in Europe and especially Germany, Europe's largest IT market.
In the long run the purchase of four units will provide CHS with a combined 1997 net sales of $US2.3 billion.
CHS is still evaluating the future of the retail chain Vobis Microcomputer, the least profitable of the four units it will purchase, Toll said. CHS may carry the retail chain as an asset up for sale, or may decide to keep it, if Vobis' returns can be increased, Toll said. "It's no secret that its not doing very well and not growing very fast," Toll said.
Although incorporated in the US, CHS sells its products only outside the US because of the highly competitive nature of the US market, which carries a significant cost of entry associated with establishing warehouses and a distribution network, Toll said.
However, short of launching its own operations CHS is evaluating other ways to enter the US market, including joint ventures or acquiring a minority stake in another company, Toll said, adding that no timetable for an US entry has been set.
Unlike other computer wholesalers, CHS distributes a limited product line for a limited number of leading computer manufacturers, believing that a "focused distribution" enables the company to respond more quickly to customers and reduce inventory and working capital requirements, Toll said.