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ScanSource Plans $623 Million In Divestitures Outside U.S.

The company says the move will open opportunities to focus more on ‘digital distribution’ and ‘higher-growth, higher-margin businesses.’

ScanSource said it plans to divest $623 million in business operations outside the U.S. in a move designed to push the company further into digital distribution and away from the legacy distribution model.

In a statement, the Greenville, S.C.-based distributor called the move “part of a strategic portfolio repositioning to align investments with higher-growth, higher-margin businesses.”

“After considering our strategic options, we decided that the planned divestitures would offer opportunities to accelerate our profitable growth and cash flow,” Mike Baur, chairman and CEO of ScanSource, said in a statement. “These actions will enable us to focus our investments on our higher-growth and higher-margin businesses in the United States, Canada and Brazil, as well as our digital businesses globally. This will give investors increased insight into our long-term growth opportunities.”

[RELATED: ScanSource Plans Microsoft CSP Assault With intY Acquisition]

CRN reached out to ScanSource for comment but had not heard back by press time.

The units considered for sale are comprised of nondigital distribution businesses in Europe, the U.K., Mexico, Colombia, Chile, Peru and the Miami-based export operations. Together those businesses had net sales of $623 million for fiscal year 2019 and as of June 30, 2019, had working capital of $205 million, according to ScanSource. The planned divestitures employ about 490 people in total across those geographies.

“[ScanSource] will communicate regularly with its employees on the sales process,” the company said in a statement. “There is no assurance that this sale process will result in a transaction or the timing of such transaction.”

The company declined to comment before its after-the-bell earnings call Tuesday, in which Baur is expected to address the move. ScanSource said it will continue to operate and invest in its digital distribution business in these geographies, including its recent acquisitions of intY, Canpango and Intelisys Global.

This news dovetails with ScanSource’s move last month deeper into cloud distribution with its intY acquisition.

That company, now known as intY, a ScanSource Company, offers two-tier distribution of cloud services from such vendors as Microsoft, Acronis and Symantec. The Bristol, U.K.-based company also brings its Cascade self-service portal and is own cloud marketplace to ScanSource. The deal gave ScanSource licensing capabilities for Microsoft Office 365, Azure Stack, Microsoft Dynamics and Microsoft Enterprise Mobility and Security, intY CEO Craig Joseph said.

Joseph told CRN that intY currently competes in North America in the cloud services market with such stalwarts as Ingram Micro, Tech Data, Arrow Electronics and Pax8.

"We're wrapping ScanSource's scale around intY to give us a deeper breadth and reach," he said at the time.

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