Hardware distributor, Omega Technology, has struck a merger deal with flailing rival, Hallmark Computer International.
Omega general manager, Barry Donaghey, said the merger would begin with the integration of each distributor's facilities in Adelaide on April 9. Melbourne and Darwin branches were then expected to be combined by the end of May.
Donaghey said the two companies had been in talks for several months. Financial terms had not been disclosed, but Donaghey said the acquisition was part of a wider growth strategy.
"Hallmark is a reputable company with strong technical ability and an emphasis on customer service," he said. "It produces high quality PC systems, servers, notebooks and LCD products with an integration focus. It also has very little components distribution."
Omega maintains offices in each state across Australia, while Hallmark has operations in Melbourne, Darwin and Adelaide. Overlapping vendor relationships include Intel, Microsoft, AMD and Gigabyte.
Hallmark founder and chairman, Edward Ho, said the focus of both businesses was similar but customer bases did not overlap.
It is unclear how many jobs will go following the merger but Donaghey insisted losses would be minimal.
Hallmark customers would continue to be serviced by its staff, he said. Ho would be retained in a consultancy role.
"Care will be taken to ensure Hallmark retains its character and personality within the new organisation," Donaghey said.
The Hallmark name - along with its Viewmaster and Portiva brands - would all be maintained, he added.
The merger with Omega comes after a year of hardship for Hallmark. The distributor announced in August it had closed both its Sydney and Perth offices due to falling revenues. It was also forced to overhaul its management structure following the dismissal of CEO, Gary Ganis, along with several senior executives and staff.
Former Adelaide business manager for Hallmark, Mel Bice - who is now managing director of Murray Computer and Office Shop in South Australia - said the match would be positive for both sides.
He suggested one of the problems with Hallmark in recent years had been a lack of product direction and pricing consistency across its state branches.
While Ho had pushed to consolidate its business at a national level, Bice said each state had retained a high level of autonomy.
For example, Hallmark did not provide national pricing for its goods, he said.
There was also a lack of coherency in core product sets, Bice said.
In recent times, the company had switched from a focus on system and server building, to AV and home automation, to selling parts, he said. The new management team would reinvigorate Hallmark and give it structure and direction, Bice said.
Ho said companies such as Hallmark and Omega needed to grow bigger in order to compete and prosper in the current market.
The distributor had been in discussions with several other parties before signing up with Omega, he said.
While insisting the deal was not a direct result of Ingram Micro's acquisition of Tech Pacific, Donaghey said it was another example of unavoidable industry consolidation.
"Further consolidation in IT distribution has long been anticipated and we are of the view that the number of players at the end of the day will be very few," he said. "The new organisation plans to be a key participant in the long term. We wish to lead rather than follow."
Donaghey said Omega was now investigating the possibility of developing further alliances and relationships with other distributors as a way of accessing better volume pricing.
The distributor also expected revenue figures to escalate through the commercial growth of its new technology platform, Freestyle, Donaghey said.