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Is Ingram Micro Next On Warren Buffett’s Holiday Wish List? Not Likely, Analyst Says

‘He looks at Tech Data as a slow-growing proxy for the U.S. economy in technology. It’s not a high flyer. It’s not a growth engine. But it reflects the overall U.S. economy. It’s got scale. It’s got size,’ Martin Wolf, president of martinwolf M&A Advisors, one of the top channel investment advisory deal-makers, tells CRN.

With Berkshire Hathaway making an unsuccessful offer for Tech Data last week, eyes in the channel turned to Ingram Micro with some observers wondering if the distributor could be next on Warren Buffett’s wish list as the company has reportedly been shopped by current owner HNA Technology.

Martin Wolf, president of martinwolf M&A Advisors, one of the top channel investment advisory deal-makers, told CRN he does not see that happening.

“I think that’s not likely,” he said. “Ingram has all sorts of hair around it. You have China. You have tariffs. He liked Tech Data. He may like Ingram for the same reasons, but it’s very complicated. He’d have to be picked by the seller. It is not something he can walk into on his own.”

In August, multiple news outlets reported that RRJ Capital was working on a deal with Ingram Micro owners that would see the distributor sold by HNA Technology in a bid to raise cash.

As time runs out on the “go shop” provision of Apollo Global Capital’s bid for Clearwater, Fla.-based Tech Data, Wolf said Buffett liked Tech Data as it represented almost an index fund of the technology sector, owing to its relationships with hundreds of vendors in the space.

“He looks at Tech Data as a slow-growing proxy for the U.S. economy in technology. It’s not a high flyer. It’s not a growth engine. But it reflects the overall US economy. It’s got scale. It’s got size. If you go back to what his overall mandate is, it has to be a certain scale. It has to be a certain size. He has to pay a fair value.”

Apollo Global Management -- a publicly traded private equity firm with a market cap of $17.1 billion and more than $312 billion under management -- shook up the distribution marketplace with the announcement three weeks ago that it had agreed to acquire Tech Data for $5.4 billion, or $130 a share. But the deal came with a “go shop” provision that allowed the company to ask for higher bids. According to reports, Bank of America, which is acting as Tech Data’s financial advisor, brought the idea of buying the company to Berkshire Hathaway.

[RELATED: 8 Big Things To Know About The $5.4B Apollo Global Management-Tech Data Deal]

Then Nov. 23 Buffett’s holding company – which is sitting on over $128 billion in cash -- made a bid for Tech Data by upping the price of the original Apollo Global Management bid to $140 a share for the distributor, only to have that offer countered and raised by Apollo to $145 a share. The “go shop” provision that allows Tech Data to solicit rival bids on behalf of shareholders expires on Monday, Dec. 9. Buffett will reportedly not make a higher bid.

The legendary investor told the Wall Street Journal that Tech Data is his kind of business.

"I may not understand all of the products that they sell and I may not understand what the customers who buy the products do with them, but I do understand the middleman's role," he told the paper.

Wolf said it’s easy to see what Buffett liked. He said Tech Data is not trading at a high multiple compared to other technology companies, meaning it is inexpensive, and it has scale.

“I think it’s a brilliant move by him,” he said. “It’s a broad-line, broad-based global distributor and it’s steady. It’s a good place to deploy cash.”

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