Insight To Buy Leading Cisco VAR Calence

Insight Enterprises plans to buy Calence, one of the largest Cisco Systems solution providers in the country, for about $125 million in cash.

The deal could reach $160 million if certain performance targets are achieved over the next four years. The price has been agreed to by the boards of both companies. Calence, No. 412 on the 2007 VARBusiness 500, is privately held. Insight expects the deal to close in the second quarter. Insight is No. 25 on the VARBusiness 500 list.

The acquisition is consistent with Insight's strategy to become a global VAR capable of providing solutions in key technology areas, according to the company.

"We are extremely excited about bringing Calence's networking, advanced communications and managed services capabilities into the Insight organization," said Rich Fennessy, president and CEO of Insight, Tempe, Ariz., in a statement. "By incorporating a greater percentage of services into Insight's complete portfolio of solutions offerings, we will further differentiate ourselves in the marketplace and solidify our value proposition as a trusted adviser of technology solutions to our clients."

Calence, also based in Tempe, has a strong presence in the Southwest, Northwest and Midwest and expects to report about $324 million in revenue in the 12-month period ending Jan. 31, according to Insight. Insight expects its networking and connectivity solutions business to increase to about $600 million with the acquisition, the company said.

Insight's percentage of revenue from services should increase to about 5 percent of total sales, from 3 percent, with the addition of Calence, Fennessy said.

As part of the transaction, Calence's CEO, Michael Fong, will join Insight reporting to Mark McGrath, president of Insight North America and Asia Pacific. Fong will maintain responsibility for the acquired business and lead the effort to integrate the networking businesses of the combined organizations.

Both Insight and Calence are Cisco Gold Certified Partners. Following the close of the sale, Insight will be one of Cisco's leading channel partners in the U.S.

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