Giant IT distributor Ingram bought by HNA Group for $6 billion

M&A merger acquisitionGlobal technology distributor turned cloud service provider Ingram Micro is to be bought by Chinese conglomerate HNA Group for $6 billion.

Ingram will continue to be based in California but is now a subsidiary of marine logistics specialist Tianjin Tianhai, which is owned by The HNA Group, an aviation, tourism and logistics outfit. The deal is expected to close in the second half of 2016. Ingram CEO Alain Monié and his management team will remain and its business is expected to continue as normal.

“The addition of Ingram Micro would help the logistics sector of HNA Group transform from a logistics operator to a supply chain operator, and provide one-stop services while improving efficiencies,” said Adam Tan, CEO of HNA Group.

Founded in 1989 when IT was a hardware defined industry Ingram Micro became the world’s largest wholesale technology products distributor with clients such as Acer, Apple, Cisco, Hewlett-Packard, IBM, Lenovo, Microsof and Samsung. It ranks 62nd in the 2015 Fortune 500. As the IT industry evolved to become software driven, it has taken steps to transform itself. It announced cloud partnerships with IBM and Parallels at its Ingram Micro Cloud Summit 2014 and promised tools to help its reseller clients make the transition to selling cloud services. To this end Ingram Micro added three new services, Hosted Exchange, Virtual Private Server and Web Hosting.

However, the funding from the new owners could help it make more of a transition, according to a statement from Alain Monié, Ingram Micro CEO. “Our agreement to join HNA Group delivers near-term and compelling cash value to our stockholders and we expect it to provide exciting new opportunities for our vendors, customers and associates,” said Monie, “innovation, new services introduction, brand management and ensuring the stability and continuity of the businesses joining their enterprise are fundamental to HNA Group’s overall strategy.”

Analyst Clive Longbottom at Quocirca said TTI seems to be ‘paying high’ in order to gain direct access to western markets. “Whether this will work remains to be seen,” said Longbottom, “will the US government and all its dependent departments shy away from Ingram now, fearing that the Chinese will be implementing back doors via firmware or software changes?”

For the general user, this will probably make very little difference, the analyst predicted. “It’s likely that TTI will be hands off, using Ingram to optimise its overall buying power on a global basis to be able to either provide better margins or to compete on price more effectively where required, ” said Longbottom. Ingram shareholders, meanwhile, are getting a 39% premium over Ingram’s closing price.