Westan has created a new wholly-owned subsidiary for its IT distribution business as part of plans to list on the Australian stock exchange by the end of the year.
The distributor's managing director, Victor Aghtan, said it had looked at an IPO late last year with several other distribution parties, but had found its mixed interests in investment and IT channel supply had hindered deals being done.
"What we found is that interested parties were concerned we weren't a purely distribution company," he said. "For example, we have a peripheral distribution business, but we also own shares in Synergy Plus.
"These interested parties wanted to talk to a company purely focused on distribution."
Through its new distribution-only subsidiary, Westan Australia, the company paved the way for a potential merger and public listing in 2005, Aghtan said.
The restructure is expected to be transparent to its business partners. Alongside the distribution business, Westan Australia will also own all operating assets of the company including intellectual property.
However, two of its 100 employees had been made redundant as a result of the changeover from Westan Pty Ltd to Westan Australia, Aghtan said.
Although admitting the Ingram Micro acquisition of Tech Pacific last year had changed the landscape of IT distribution in Australia, Aghtan said the decision to create Westan Australia was a way of sustaining the business in the future.
"I think the smaller distributors are going to struggle if they don't have the size and economy of scale," he said. "This is the key to the whole distribution business.
"Everyone knows that there are razor-sharp margins where you have very high efficiencies. Smaller distributors are struggling."
Westan has previously acquired niche distributors to foster and grow its business. The most recent example was its buyout of Quality Technology Distribution in 2003. The subsidiary is now the basis for its consumer electronics arm.
In the instance of an IPO however, Westan was more likely to merge with a similar-sized organisation, Aghtan said.