Synnex To Buy PC Wholesale From Insight

Synnex said Tuesday it has agreed to buy the assets of distributor PC Wholesale from Insight Enterprises.

Under the deal, Synnex plans to pay $10 million for PC Wholesale plus about $20 million for other assets, subject to closing adjustments. The deal is expected to close by early March, the companies said.

Insight acquired PC Wholesale when it bought regional integrator Comark in 2002. For years, rumors had abounded that Insight would sell off the distribution unit because it never fit Insight's core model of selling to end users. But that finally happened after Synnex executives concluded a recent visit to PC Wholesale in the Chicago area.

"As we look toward Insight's future, we have concluded that selling IT products to other resellers is not a core element of our growth strategy. Therefore, we are very pleased to find a company like Synnex that is interested in assimilating PC Wholesale's business into its own," Insight President and CEO Rich Fennessy said in a statement. "As a result of this divestiture, Insight will be able to continue to focus more of our time and resources, and use the proceeds, to continue to grow our core business and capabilities."

PC Wholesale had about $224 million in sales in 2006, according to the companies.

"PC Wholesale has a very stable professional sales staff and is a premier IT distributor with a specialized focus on end-of-life and refurbished equipment, a new vertical for Synnex that is complementary to our core distribution business," Synnex President and CEO Robert Huang said in a statement. "Through this acquisition, we will increase our customer base and provide additional services for our OEM partners, two important goals in our growth strategy."

Synnex said that after the acquisition is completed, it doesn't expect to retain the entire revenue run rate of the PC Wholesale business, primarily because of duplications in the customer base.

PC Wholesale had lost vendor distribution rights over the last several years, including Toshiba, which changed its contractual terms from a distribution agreement to a direct market reseller pact last July. The change effectively prevented Insight from obtaining better Toshiba pricing and market development fund (MDF) terms than rival direct marketers or resellers.

Visitors to PC Wholesale's Web site on Tuesday were greeted by a Synnex welcome letter and an application form to become an authorized Synnex reseller.

"As a valued PC Wholesale customer, we want you to be one of the first to learn more about the acquisition and what it means for you. Ultimately, our goal is that you become a long-term, satisfied customer of Synnex and benefit from the acquisition," the welcome message said.

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