Westcon Group has broken off acquisition negotiations with Netherlands-based Landis Group because the asking price was too high, but the networking distributor still has possible acquisition "targets on the table" in Northern Europe and the Scandic region, Westcon Group executives said.
The U.S. distributor had announced its intent to acquire Landis in January to gain a significant European presence and stronger relationships with manufacturers. But talks between the two companies broke down when Landis wanted the asking price based on last year's value while Westcon Group preferred a "more forward-looking" valuation, the company said.
Westcon Group would not reveal what it was willing to pay for the European distributor.
"I'm disappointed that we were not able to complete the acquisition of Landis," said Alan Marc Smith, CEO of Westcon Group, at a press conference Friday afternoon. "We agreed amicably that it was best to part ways for them to pursue their strategy and for us to pursue our strategy, which is unchanging. We continue to believe that a Pan-European platform is strategic to Westcon Group and therefore we will move forward with that."
Westcon Group said specific details about its discussions with Landis Group were under nondisclosure, but Smith said the two distributors could begin renegotiations in as early as six months if changes are made to the proposed valuations.
The valuation breakdown was based solely on a "price or purchase perspective," and the value of Landis Group to Westcon Group's overall business, Smith said. The breakdown had nothing to do with manufacturer relationships or product lines, he added.
Landis Group focuses on data networking, telecommunication, systems and storage and network security markets through value-added distribution, services and training, the company said. The sale, for an undisclosed sum of cash and shares, was to include all of Landis Group's sales offices, distribution centers and the main part of its logistics operations, Landis Group executives said.
The acquisition would have given Westcon Group a new presence in seven European countries and strengthened its footprint on three others. Landis has locations in Austria, Belgium, Denmark, France, Germany, Netherlands, Norway, Spain, Sweden and the United Kingdom. Distribution centers are located in France, Netherlands and the United Kingdom.
The Landis Group business units under discussion were to include 600 employees and an operation that generated $400 million, or 65 percent of the company's total business, Landis said.
"The biggest concern the [financial analysts had was that we would overpay for the company," said Smith.
Westcon Group intends to move forward with its European strategy as it had done prior to the Landis Group discussions, which was to acquire premier players on a country-by-country basis, Smith said. For Westcon Group, the European expansion initiative is ranked second only to its continued to drive to evolve its value proposition in the channel, he added.
Westcon Group expressed the most interest in gaining a presence in France and Spain, but the company said the two countries may not be the first acquisition targets, said Smith.