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Raymond James Report: Ingram Parent Shares Halted, Could The Distributor Be Sold To Synnex?
Joseph F. Kovar
The conglomerate in China that owns Ingram Micro could be ready to announce something big and some on Wall Street wonder if that means Ingram Micro is about to be sold to a rival, like Synnex.
Trading in China of Ingram Micro's Chinese-based parent company, Tianjin Tianhai Investment Company, was stopped Friday. Adam Tindle, an associate analyst at Raymond James & Associates, a St. Petersburg, Fla.-based analyst firm, wrote in a research report Friday that the company's shares were suspended due to a pending "major announcement."
"While [a deal for Ingram Micro] this could take place in a re-IPO [initial public offering] of IM [Ingram Micro], we have seen major consolidation across our distributors and ponder the possibility of one of our distributors buying Ingram," he wrote. "We think Synnex makes the most sense."
Tindle added that, with the current wave of consolidation in the distribution business, it would make sense for Synnex to sell its Concentrix BPO business and purchase Ingram Micro. "The core distribution industry has undergone significant consolidation and this would immediately make Synnex the largest IT distributor in the world," he wrote.
"The industry in which Concentrix operates is undergoing significant disruption as a result of trends in AI, machine learning, and automation, and we wonder if it would be best served as a standalone entity," Tindle wrote.
Synnex did not respond to a CRN request for comment. Synnex shares closed up $1.12 (0.82%) to $137.97 in trading on Friday. The company's shares lost 5.2 percent of their value from Jan. 9 to Jan. 10, following Synnex's fourth-quarter report.
Tianjin Tianhai, a publicly-listed subsidiary of HNA Group, closed its acquisition of Ingram Micro in December of 2016. With its $6 billion purchase price, Ingram Micro was a significant addition to HNA Group, which is listed as No. 170 on the Fortune Global 500 with revenue of over $53 billion.
Bloomberg on Friday reported HNA Group suspended trading on the Shanghai stock exchange ahead of what was termed a "major" announcement. Trading in another HNA Group company, Hainan Air, was suspended Wednesday pending a possible "major assets restructuring," Bloomberg said.
Bloomberg also reported that HNA Group has been under pressure thanks to the amount of debt it has taken on as part of an acquisition spree of global assets. The stock trading halts and HNA's need to rid itself of debt that is fueling the speculation around an Ingram Micro divestiture of some sort.
An Ingram Micro spokesperson told CRN via email the company declined to speculate on the rumors.
Tindle, in a December research report, cited an article in The Wall Street Journal which reported that HNA Group is looking at $6 billion in real estate asset sales in order to pay off debt, but that it could have difficulty finding buyers for some of those assets.
"Interestingly, $6 billion was the purchase price for Ingram," he wrote.