Dicker Data snaps up security and IT division from Hills

Dicker Data snaps up security and IT division from Hills

Chris Price returns to head up new physical security business amid expansion plans.

David Dicker (Dicker Data)

David Dicker (Dicker Data)

Credit: Dicker Data

Dicker Data has unveiled plans to acquire the Security and Information Technology (SIT) distribution division of Hills in Australia, striking a A$20 million deal to on-board new employees, vendors and partners within an expanding market segment.

Terms of the deal will see the creation of a new physical security business and transition of 130 team members from Hills to Dicker Data, in addition to the latter taking ownership of a nationwide network of seven trade centres.

The new division will be led by Chris Price who re-joined the company in January 2022 as general manager of physical security. Having formerly held the position of commercial director in the business between 2006 and 2014, Price has since occupied director-level roles at HP, Ingram Micro and, most recently, Brennan IT.

“This will add an entirely new business area to our company and introduce us to a wide range of new customers, as well as adding significant new revenue with the promise of significant expansion on that, going forward,” said David Dicker, chairman and CEO of Dicker Data.

The business sale agreement will result in Dicker Data acquiring the SIT division for a cash consideration structured as a partial net asset sale. Upon completion of the deal, Dicker Data will acquire the business, inventory, customer and vendor relationships, employees and certain other net assets.

According to a company statement, the purchase price represents a premium to the net assets sold and the final amount is largely dependent upon inventory related balances at the completion date, which is estimated to be in the range of A$20 million.

“Ultimately, we have determined that a change of ownership to an organisation with strong capability in technology distribution and solutions, is in the best interests of the Hills shareholders and the future success of the SIT division, its people, suppliers and customers,” added David Clarke, CEO of Hills.

Hills -- which recently ceased operations of its security distribution business in New Zealand due to unprofitability -- appointed Clarke as CEO in May of last year to help get its business back on track following a period of internal restructuring to minimise the impact of COVID-19.

The proposed acquisition is subject to Hills shareholder approval -- which will be sought at a general meeting of shareholders which is expected to be held in early April 2022 -- with directors expected to unanimously recommend voting in favour of the transaction.

Expanding market reach

Lidcombe-based Hills operates as the largest distributor of physical security products in Australia, with the SIT division generating A$123.2 million revenue in FY21, with A$98.7 million of the total attributed to security and the remaining A$24.4 million to IT products.

As a result of this deal, Dicker Data will now assume such a market mantle as the company expands into new sub-sectors of technology, with the specific aim of capitalising on the “market convergence occurring between security and IT”.

"The physical security market has traditionally been serviced by an industry-specific group of businesses who are highly specialised," a company statement read. "Similar to the professional AV and electrical trade markets, the physical security segment is converging with the IT market as IoT [internet of things], artificial intelligence, smart devices and cloud solutions become critical elements of best-practice security solutions."

According to Industry Research findings, physical security market investment is expected to reach US$102.4 billion by 2027, up from US$74.9 billion in 2020 at a global level.

Triggered by factors such as heightened threat levels and government regulations, the channel operating in Asia Pacific -- notably Australia -- is expected to benefit from such demand in the years ahead, as established and emerging players battle for market share.

Within this context, Dicker Data shares three mutual vendors with the SIT division which presents opportunity to “novate agreements” with over 50 net new vendors aligned to company’s growth ambitions.

The division currently works with more than 2,000 customers -- of which 85 per cent are new to Dicker Data -- which is also expected to expand the distributor’s total active customer base to over 10,000 businesses across Australia and New Zealand.

The move comes approximately six months after Dicker Data first unveiled plans to acquire Exeed in a landmark $68 million deal, shaking up the distribution landscape in New Zealand with Justin Tye at the helm of a combined entity housing an expanded arsenal of market-leading vendors.

The blockbuster move -- finally confirmed following years of industry speculation -- has resulted in Dicker Data assuming second spot within an increasingly competitive and consolidated Kiwi supply chain, armed with the platform to “rival the largest distributor” in the market.

In taking control of the Auckland-based business -- viewed by many as a model of channel success in the Kiwi ecosystem -- Dicker Data assumed ownership of a portfolio spanning Apple, HP, Hewlett Packard Enterprise and Microsoft across commercial and retail sectors, in addition to exclusive local distributorships with Motorola, Ruckus and Webroot among others.

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Tags Dicker DataHillssecurity

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