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Tech Pac sale rumours continue

Tech Pac sale rumours continue

Sustained speculation about the final fate of Tech Pacific could be coming to a head with strong rumours circulating last week that an acquisition deal was imminent. On Friday it was strongly rumoured that distributor Synnex was acquiring Australia's largest distributor which is owned by Dutch company Hagemeyer.

Neither company would admit they were in negotiations, however Tech Pacific confirmed it is now dealing with just one potential buyer, which ARN sources have strongly indicated is Synnex.

A spokesperson for Graham Pickles, chief executive Hagemeyer's Asian Pacific operations, was reluctant to give details on the state of its sale and the company has steadfastly refused to divulge who it is in negotiations with throughout the process.

However, sources suggest the deal is very close to being signed, sealed and delivered and Synnex has emerged as the new favourite.

Synnex's finance director, Bob Tang, would not comment on his company's position in relation to Tech Pacific, but he did reveal non-disclosure agreements had been signed in relation to some acquisition negotiations.

"We are always interested in looking at ways to grow our business other than just through organic growth," Tang said. "We have been approached by some other large distribution companies that were looking for us to buy their business, but I am not in a position to discuss any of the details at this stage."

David Cullen, managing director for Tech Pacific's Australian distribution operation, didn't believe the rumours.

"As far as I know, nothing has changed," Cullen said. "If I were a betting man, I wouldn't be placing my money on Synnex."

Despite the official stonewall, from both parties, sources are insistent the acquisition will take place and that "the deal makes sense". Synnex is a large and rapidly growing company with a core competency in IT and distribution. "This is the perfect way to consolidate its growing presence in Australia and the parent company can afford it," the sources said.

Synnex Australia is backed by Taiwan-based Synnex Group, which has massive global (mainly Asia Pacific) distribution and white-box/OEM operations that generated. The company is worth in excess of $16 billion.

Synnex is currently nudging Ingram Micro out of third position in the Australian distribution channel, with local revenues estimated to be in the vicinity of $200 million.

Should Synnex acquire Australia's largest distributor, it would be the completion of over seven months of speculation regarding the fate of Tech Pacific. In November last year ARN revealed Hagemeyer had appointed merchant bank Salomon Smith Barney as the broker for a possible intended public offering (IPO) or sale of the company.

A broker working for Salomon Smith Barney, who did not wish to be named, confirmed the financial company was still handling the sale of Tech Pacific, but would not be drawn further.

Ingram Micro refuted all claims in March that it was in discussions with Hagemeyer to acquire Tech Pacific's Asia-Pacific operations.

Taking over the operations of Tech Pacific would certainly mean that Synnex moves well and truly out of its components and white-box heritage and into the mainstream of distribution.

The revelation is also in line with comments Hagemeyer's Pickles made to ARN sister publication New Zealand Reseller News in April -- that a possible acquisition would be announced by mid-June. At the time, Pickles said the market had "gone against" Tech Pacific ever since Hagemeyer announced the business was up for sale.

"If we find the right buyer who is prepared to pay the right price, we'll sell. If the pricing is not right, we'll continue to be the happy owner," Pickles said at the time.

He wouldn't provide any clue as to what the "right price" might be or which buyers were courting him.

"Tech Pacific is an incredibly good business which will do better than $3 billion in sales this year in Asia-Pacific," he says. That's in contrast to a loss-making European IT distribution business also owned by Hagemeyer, Computerij, which the company is selling off in parts and shutting other parts down.

"Tech Pacific is the last major piece of what might be called Hagemeyer's non-core business," Pickles said, which the company is disposing of as it concentrates on distribution of electrical goods and other industrial products.


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