Cisco VAR Consolidation Continues

channel consolidation wave

With the acquisition, expected to close later this week, Calence will add 20-plus employees, about 150 clients and $40 million in revenue, said Jim Teter, COO of Calence, Tempe, Ariz. Terms of the deal weren't disclosed.

The acquisition will complement Calence's current Texas business, Teter said. Calence's Southern region, primarily based on its Texas business, accounts for about a third of the solution provider's $300 million in sales. With the additional $40 million in sales, it will likely become Calence's largest region, he said.

"It's a great complement to the business we already had and a great way to add new customers and employees and strengthen our presence in Texas," Teter said, adding that GDS has five offices in Texas located in areas where Calence already has a presence.

Calence and Lafayette, La.-based GDS are Cisco Gold partners with strong practices in VoIP and unified communications, networking and security. Calence aims to offer its new customers a deeper set of services than they were getting from GDS, particularly in managed services, Teter said.

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For GDS, the sale will create a smaller, more profitable organization, according to Chris Vincent, senior vice president at GDS, who noted that the nearly $80 million company will shrink by half.

"We've been growing as an organization quite a bit, and we got to the point where it was going to require a large investment to take it to the next level," Vincent said. "Basically, we're looking for an easier-to-manage organization. Sometimes bigger isn't always better," he added.

With the proceeds from the sale, GDS expects to shore up its business in Louisiana and Mississippi, areas where the solution provider already has begun adding employees, Vincent said. GDS also will continue adding vendor partners to complement its Cisco business, particularly in areas such as surveillance and access control, he said.

The acquisition is the first for Calence LLC since its formation in February as the result of a combination of assets from solution provider Calence Inc. and Avnet Enterprise Solutions, a division of distributor Avnet. Plans to merge surfaced last November.

"Our strategy certainly is to grow, and we will grow organically and, where it makes sense, through mergers and acquisitions as well," Teter said.

Calence is the latest channel player to beef up its business through mergers and acquisitions of other solution providers. CDW, Vernon Hills, Ill., last week completed its $184 million acquisition of Berbee Information Networks, a Madison, Wisc.-based Cisco Gold partner.

Also this month, San Francisco-based FusionStorm, Sun Microsystems' largest West Coast solution provider and a Cisco Gold partner, acquired Sunnyvale, Calif.-based Jeskell, IBM's biggest government solution provider, creating a $400 million channel powerhouse. In addition, distributor Bell Microproducts, San Jose, Calif., this month acquired a minority stake in ProSys Information Systems, a $400 million Atlanta-based solution provider and the largest company on this year's CRN Fast Growth 100 list of solution providers.