Westcon Americas partners hope that the close of Synnex's acquisition will result in more cybersecurity investment while not disrupting existing staffing and service levels.
"We are hoping that Synnex allows Westcon to continue operating as a value-added distributor, continually bringing new products to the table and working with us on margin to support us in growing our business," said Danny Timmins, national cyber security leader at Mississauga, Ontario-based MNP LLP.
Although Timmins expects that margins will typically remain low for most products, he would like to see Synnex push Westcon to work with partners like MNP around larger deals so that they can obtain a better margin.
The completion of Fremont, Calif.-based Synnex's acquisition of Tarrytown, N.Y.-based Westcon's $2.18 billion North American and Latin American businesses was announced Friday. Synnex had been the only North American broadline distributor not carrying Cisco, while 32 percent – or nearly $700 million – of Westcon America's revenue comes from Cisco.
"We believe this talented team and their recognized leadership in the security, UCC and networking space will enhance our value proposition in the marketplace," Kevin Murai, Synnex's president and CEO, said in a statement. "The acquisition of Westcon-Comstor Americas continues to build on our strategy of positioning the business to where technology is growing."
Synnex will be paying $600 million in cash upfront for the business, as well as up to $200 million in earn-out payments if gross profit performance targets are achieved through February 2018. The distributor said it expects the acquisition to generate $0.70 in diluted non-GAAP earnings per share in the first 12 months after close.
Synnex paid an additional $30 million for a 10 percent stake in Westcon-Comstor's $2.35 billion international business, which includes Europe, the Middle East and Africa, and Asia-Pacific. Synnex is currently the only North American publicly-traded distributor that doesn't do any business in Europe.
"The strategic partnership between Westcon International and Synnex will provide significant growth opportunities for both businesses while working together to serve vendors and customers globally," Jens Montanana, CEO of Westcon-Comstor parent company Datatec Ltd., said in a statement.
Datatec shareholders voted to approve the acquisition at a general meeting Wednesday, and the company said all other conditions needed to complete the transaction had been satisfied.
Westcon-Comstor said its Americas and International businesses would operate under a single go-to-market structure to ensure that its vendor partners and solution providers receive the same level of service. The $800 million acquisition also gets Synnex into Latin America for the first time thanks to Westcon America's 800-employee, $517.8 million business across 12 countries in the region.