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Tech Pac deal to see Ingram triple in size

Tech Pac deal to see Ingram triple in size

Provided Ingram Micro gets regulatory approval to finalise its $700 million takeover of Tech Pacific, the two companies will operate as a single organisation by the end of the year.

But the process of fully amalgamating Australia's two largest distribution houses is going to take a lot longer and has other distributors hoping the new superpower takes its eye off the ball while tackling internal issues.

Ingram Micro Australia managing director, Steve Rust, estimated back-end systems would not be fully integrated until well into 2006.

"We have totally disparate systems. I think they [Tech Pacific] run SAP while ours is proprietary," he said.

"We will have to take a lot of care over pulling those together. HP and Compaq took a couple of years to merge back-end systems."

While a lot of work would be required to bring everything together, Rust was understandably excited about what the takeover would mean for Ingram.

"It will triple our size in Australia and bring some vendors and customer bases to our stable that we haven't had," he said. "The large retail mass merchants are not an area where Ingram Micro has participated and that is a tremendous addition."

When senior Ingram management announced the takeover to staff, they were immediately quizzed about the possibility of redundancies.

"That was the first question asked but this investment has been made for growth, not contraction," Rust said.

"We are proposing to expand the business and position the new entity for growth."

Once local management had developed an understanding of its combined product lists, Rust said attentions would turn to filling in any perceived gaps.

He was also pleased by some of the major vendors, particularly in the consumer electronics (CE) space, which Ingram had acquired as a result of the merger.

"We will be speaking with significant vendors not currently in the stable - Cisco is an obvious example," he said.

"But the Tech Pacific deal has already added some major CE players such as Sony and Philips."

While Rust acknowledged the takeover would see vendors reassessing their distribution models, he said there would be no need for knee-jerk reactions.

"There will be no immediate affect on the market so there will be plenty of time for people to think through their strategies," he said.

"There's no need for abrupt responses.

"Over a period of time, vendors will reassess their distribution plans in Australia and this may create opportunities for other distributors.

"Being realistic, we know vendors don't normally have exclusive relationships because they like to diversify risk."

Resellers would also be thinking about what the merger meant for them, Rust said. But he insisted reduction in reseller choice was not a major issue.

"Resellers may think they are having their choices reduced if they used to deal with Tech Pacific and Ingram Micro. But, over a period of time, this industry is self correcting and there are still plenty of choices when you consider that there are 150 distributors in the market," he said.

Furthermore, increased size could enable Ingram to build enhanced systems that would benefit the reseller community.

"There may be ideas that we can bring to the Australian market from the US that haven't been possible in the past because we lacked the critical mass," he said.

"For example, we have a reseller community in the US where they can tap into each others skills.

"One reseller might not have the Citrix skills required by a customer but can find another reseller who does and share the contract rather than forgo the opportunity altogether."


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