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Ingram Micro Denies Raymond James Report, Says Trading Halt Is Not Related To Plan To Sell Distributor

Steven Burke

Ingram Micro Sunday denied a report from financial services firm Raymond James that speculated that a halt in shares of Ingram's parent company HNA Group and Tianhai Investment could be related to a possible sale of the distribution behemoth to Synnex.

"We have spoken with executives at (Ingram Micro parent) HNA Group and Tianhai Investment who have confirmed that the trading halt in Tianhai Investment shares is not related to any plan to sell Ingram Micro," said an Ingram Micro spokesperson in an email to CRN. "Ingram Micro is a major strategic investment for HNA Group and a cornerstone in Tianhai Investment's development and technology transformation."

[Related: Raymond James Report: Ingram Parent Shares Halted, Could The Distributor Be Sold To Synnex?]

The statement came after Raymond James Associate Analyst Adam Tindle on Friday issued a report titled "Ingram parent Halted: Could Synnex be a buyer?"

"This morning, shares of Tianjin Tianhai (parent of Ingram Micro, subsidiary of HNA Group) were halted due to a pending 'major announcement,'" wrote Tindle in a research report on Friday. "We have previously commented on how it may make sense to monetize Ingram Micro instead of selling disparate real estate properties. While this could take place in a 're-IPO (initial public offering)' of Ingram Micro, we have seen major consolidation across our distributors and ponder the possibility of one of our distributors buying Ingram. We think Synnex makes the most sense and argue that a sale of Concentrix and purchase of Ingram Micro."

CRN reached out to Raymond James Associate Analyst Tindle and Synnex on Sunday, but they could not be reached for immediate comment.

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 fueled the speculation around an Ingram Micro divestiture.

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 119 on the 2017 CRN Solution Provider 500, said the speculation regarding distribution consolidation comes amid the challenges facing distributors to move beyond pick, pack and ship in the cloud era.

"In 20 years of being in business, I have seen many changes and adjustments in the distribution market as those companies try to bring new value based offerings to VARs," he said. "A lot of times you are not able to do that in an organic environment and you need to do it through acquisition."

Venero said Chinese ownership of Ingram Micro has also roiled the US distribution market. Future Tech, for example, has shifted government and government subcontracting business away from Ingram Micro.

"Chinese ownership of Ingram Micro has changed the way we do business with Ingram," he said. "We don’t acquire IT equipment through Ingram for accounts of risk which includes the federal government and subcontractors. There is a need for a very stringent and secure supply chain for government and government subcontractors where there is fear and risk of either IP (intellectual property) theft or secrets. There is a battle between the US and China as it relates to intellectual property. "

Venero said he expects further consolidation in the distribution market, but noted there are strong new entrants like cloud distributor Pax8 and privately held legacy distributors like D&H challenging larger players like Ingram. "There is always room for an aggressive and disruptive player that can take share from the status quo," he said.

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.

The speculation regarding Synnex came after Kevin Murai, who has been CEO of Synnex for the last decade,announced earlier this week that he was stepping aside to become chairman of the board. Taking over for Murai is Dennis Polk, who currently serves as Synnex's chief operating officer.

Synnex shares closed up $1.12 (0.82 percent) to $137.97 in trading on Friday. The company's shares lost 5.2 percent of their value following fourth quarter results and the news that Murai was becoming chairman.

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