CNI goes berserk - Buying spree set to transform integrator into $500m giant

CNI goes berserk - Buying spree set to transform integrator into $500m giant

Look out Com Tech and co - here comes CNI. Flushed with capital from South African parent company Datatec, the Melbourne-based integrator will over the next 12 to 18 months embark on a buying rampage, building itself into a $500 million super integrator.

ARN has ascertained that right now, CNI is in final negotiations with three integration competitors, one of which is Sydney integrator Corporate Computer Sales (CCS). The deal will include both the Sydney and Melbourne operations.

Bruce Harvey, Datatec's Australian managing director, said he was not yet at liberty to reveal who CNI was acquiring but confirmed the com-pany was currently in negotiations with a number of parties.

Room at the top

"We definitely feel that there is room in the Australian market for us to become a super integrator, because there isn't one today," Harvey said. "If you look at a company like Com Tech who are quite large in Australia, I think you need to be at least twice that size to be considered a real tier-one integrator."

CNI's director Lyle Potgeiter told ARN that the worldwide networking-centric integration juggernaut being built by Datatec will enable CNI to target and secure big global customers.

"The global reach we have is significant. We're already having discussions with companies who are looked after by Datatec elsewhere in the world and we've found it's a very simple decision for them to say let's go for it."

While unable to confirm that it was negotiating with CCS, Potgeiter did say "our acquisition strategy is in place.

"We have a mandate to expand and grow the integration side of the business."

CCS' managing director Brendan Burgess also declined to comment.

Potgeiter said CNI was first looking to fill in its geographical gaps. It wanted a presence in all Australian capital cities, as well as New Zealand, Hong Kong and Singapore.

CNI was also aiming to fill a number of technological holes including gaining expertise in the mid-range Unix and AS/400 markets as well Internet/intranet development skills.

The companies most likely to be threatened by CNI are big local network integrators like Com Tech and NetStar (formerly Anixter's networking integration business). Both of those companies were coy about any speculation, commenting that they would continue to focus on their own customers and their own business. However, officials from both companies were willing to go on record saying that they thought CNI had the job ahead of them.

"There's a hell of a difference between running a single state company and a national," said Com Tech's managing director David Shein.

"What you really want is consistency in terms of your service and culture. If you're going to acquire six companies in Australia alone, it's going to make it hard to maintain that consistency and culture."

No mean feat

"Good luck to them," said Mitch Radomir, NetStar's marketing and business development manager. "To be that size means they will have to be as big as the top four network integrators in Australia. To do that in 12 to 18 months would be no mean feat."

Neither believed they would be forced to follow CNI's acquisition lead to keep up.

"If we can't deliver what the customer needs, we will partner to deliver that. That gives us flexibility over who we work with," Radomir said.

"If we acquire companies, we will acquire companies that make sense," said Shein.

"We don't want to be a bank that's desperate to grow the earnings of our parent company. If I were to go out and buy 10 companies, would it make me a better company? Maybe not.

"We're a substantial company as we are. So long as we have critical mass in the market we operate in, I'm happy."

Both Shein and Radomir pointed out that their parent companies were also large multinationals.

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