Technology distribution company Ingram Micro (IM) has acquired value added technology distributor Promark Technology. The latter particularly focuses on data storage, data management, and products and services related to electronic document imaging.
The acquisition, which was closed on November 30, is a prudent move by Ingram. Not only will the acquisition strengthen Ingram’s position in the premium products and solutions market, but it will also help the company to strengthen its leadership position at public sector organizations.
The company is especially gaining from increased orders from Small & Medium Business (SMB) organizations in Europe, particularly in Germany and the U.K. This sector continues to spend on IT even as macroeconomic headwinds continue to impact overall business in Europe. Ingram is now targeting the SMB segment in a more comprehensive way, not just in Europe but across all regions. Moreover, following the acquisition, Ingram will be able to offer better services at competitive prices.
Cost benefits of cloud computing are pushing different companies toward massive information technology restructuring and upgrades. This is one of the reasons that SMBs have been investing in the area despite the weak economic conditions that have led to a slump in overall IT spending. We expect this to continue working in favor of distributors like Ingram. Again, the company’s partners and associates of Promark will offer a vast array of business opportunities that were previously unavailable.
Acquisitions have always been the preferred strategy for Ingram’s growth. A couple of months back, Ingram closed the acquisition of Brightpoint Inc., a leading distributor of wireless devices, for a cash consideration of $840.0 million.
We remain optimistic about Ingram Micro’s strategic relationship with network giant Juniper Networks Inc. (JNPR - Analyst Report) as well as with tech giants such as Hewlett-Packard Company (HPQ - Analyst Report), IBM Corp. (IBM - Analyst Report) and Microsoft Corp. (MSFT).
However, the company’s significant European exposure, debt burden, and low order volume from government companies may have a negative impact in the short term.
Currently, Ingram Micro has a Zacks Rank #3 (Hold).