While rumors have swirled around a possible PCM takeover, Zones CEO Murray Wright said Thursday the company is definitely not pursuing a takeover of the solution provider rival.
Chatter over a possible takeover began in April when Zones Chair Firoz Lalji and his wife Najma invested in 5.02 percent of shares in El Segundo, Calif-.based PCM, according to SEC filings. Lalji said at the time that he believed PCM shares were "grossly undervalued" as the company was "poorly managed" and "one of the poorest performing companies in the industry channel."
Solution providers at the time speculated the move meant Lalji would take an activist role in the solution provider, with the possibility of a takeover of the company, which is No. 27 on CRN's 2014 SP500 list. Zones is No. 31 on the SP500 list.
However, Zones CEO Murray Wright set the record straight on Thursday, saying in a CRN interview that the move by the company chairman has nothing to do with the solution provider itself. Wright strongly reiterated that the company was not pursuing a takeover of PCM.
"The investment by Mr. Lalji has nothing to do with Zones. He is our chairman and shareholder of Zones Inc. and I think his investment hit the newswire and he'd be a better person to ask about what his intentions and what he is thinking. Just so were clear, Zones Inc. is separate from Mr. Lalji," Wright said.
PCM posted record results in its first earnings call after the SEC filing, but was silent on the issue of the Lalji's stock purchase less than a month before.
Lalji did not respond to CRN's request for comment through Zones, saying the share purchase was a personal investment.
Martin Wolf, founder and president of San Ramon, Calif.-based Martinwolf M&A Advisors, said he doesn't see the investment as unusual. Furthermore, he expects Lalji to be rewarded handsomely for his investment as the company is undervalued.
"It’s not in itself unusual that a principal of a private company would take stock in another company," Wolf said. "Since Zones isn’t public anymore, it’s the same as equivalent shares in CDW or Insight, or for that matter IBM or Microsoft."
Another knowledgeable source who did not want to be identified said that he sees the shares purchase as move a move by Lalji to "rattle" PCM CEO Frank Khulusi. The executive said PCM has responded already by selling real estate and retail assets, which the company announced in its latest earnings call.
"I understand that there's bad blood between the two of them," the executive said. "This is kind of a way to get after them."
PUBLISHED AUG. 15, 2014