Although still the subject of a protracted takeover bid from Cellnet, Dicker Data has not ruled out the possibility of turning the tables on its larger distribution rival. With roughly 50 million shares worth $0.93 at the time of writing, ASX-listed Cellnet currently has a market value in the region of $46.5 million.
Dicker Data's managing director, David Dicker, claims to have spoken to bankers about funding a Cellnet takeover last year when shares were trading above $1.20. He said a finance agreement was reached for 70 per cent funding.
"It would be a very high-risk transaction and we would have a lot of work to do," Dicker said. "But the sales volume is very attractive and the combined revenues of the two companies would make us the second biggest distributor in the market. That would put us in good shape."
Cellnet chairman, Reg Clairs, said he had not spoken to David Dicker personally, but admitted discussions between Dicker Data and the Cellnet management teams were ongoing. While the focus of those meetings had been exploring the possibility of Cellnet acquiring Dicker Data, Clairs said any counter-bid lodged by Dicker would be considered on its merits.
During discussions between the two companies, initially instigated by Cellnet's former management team, Dicker had pitched the idea of a reverse merger but was not given any encouragement.
He said the arrangement would have seen Cellnet issue new shares to acquire its NSW-based rival, with Dicker taking control of the combined entity. "We could then try to get it operating to the same matrices we [Dicker Data] are running at now," Dicker said. "We make revenues of about $6 million per head but Cellnet is operating at about $1.6 million."
Dicker Data has had a very successful year since bringing in Ingram Micro's former IBM business manager, Chris Price, as sales manager last June. Annual revenues have swelled by $50 million to top $175 million in the 12 months to June 30. Across Australia and New Zealand, Cellnet recorded revenues of about $600 million during the same period.
The substantial growth recorded by Dicker Data has led to criticism from some quarters that it has been winning business by operating at ultra-thin margins that hurt the market for everybody else.
"I'm surprised people are questioning our pricing because we are running a profitable business," Dicker said. "The market determines what margin you can make and there's not really anything you can do about it. You have to set your costs to work within that."
Dicker Data's move into new premises located in the Sydney suburb of Kurnell is scheduled to go ahead early next month. It is expected to increase warehouse capacity by about 50 per cent.