Global Game Changer: Computacenter Acquires FusionStorm

Computacenter, the $5 billion European systems integrator behemoth, is acquiring fast growing FusionStorm, No. 51 on the CRN SP500, a $600 million powerhouse with a significant hyper-converged, software defined and cloud consulting business.

The blockbuster deal gives the United Kingdom headquartered Computacenter a strong foothold in the US market with the addition of the services muscle from San Francisco based FusionStorm.

The deal expands Computacenter's headcount in the US by 50 percent and provides the ability for the company to offer a full range of services in the US consistent with its European offerings. FusionStorm will be integrated into Computacenter's existing US business.

Under the terms of the deal, Computacenter will pay FusionStorm $70 million when the deal is completed and up to $20 million deferred cash depending on the levels of EBITDA (earnings before interest, taxes, depreciation and amortization) and profits achieved by FusionStorm over a 15 month period.

Computacenter will also contribute a $45 million cash infusion to refinance existing credit facilities for FusionStorm which earned $3.9 million on sales of $595.5 million in 2017.

"This transaction broadens our capability to serve our international customers and should enhance our existing customer offer and reach into the US marketplace whilst providing an opportunity to improve the long-term prospects for the employees of FusionStorm and Computacenter US," said Mike Norris, group chief executive of Computacenter, in a prepared statement.

Martin Wolf, president of martinwolf M&A Advisors of Walnut Creek, Calif., a channel M&A deal maker who advised Computacenter on the deal, said it is a game changer for both companies.

"Every sales rep from Computacenter (which now includes FusionStorm) is going to be a much better sales rep with more products and services to sell," he said. "Their quiver is fuller today."

Wolf credited Dan Serpico with driving big value as the CEO of FusionStorm. "Dan Serpico has done a terrific job," he said. "He had a really, really difficult hand. He refused to give up and he created real value for shareholders and employees."

Wolf predicted that the rapid pace of channel merger and acquisition will continue into 2019. "I think we are going to see more and bigger deals," he said. "You have some large companies out there that are looking to make deals. The consolidators are large by definition."

Mike Keogh, president of Computacenter Americas, will lead the FusionStorm organization. Keogh joined Computacenter three years ago after a decade at CompuCom where he was vice president of infrastructure strategy and design. Keough will replace current FusionStorm CEO Serpico, who will step down at the end of the second quarter 2019.

Serpico, who was recognized by CRN in 2016 as one of the top 25 innovators in the industry for leading a technology innovation drive at FusionStorm, said Computacenter was one of many potential suitors.

"Computacenter stood out for their great cultural fit and I am very proud that we can start the next step in our company's journey as part of this great business," said Serpico in a prepared statement. He said the deal represents an "exciting opportunity" for employees, customers and partners by bringing international coverage and new security services.

FusionStorm – one of just a handful of partners holding the Dell EMC Titanium Black status - has received multiple Partner of the Year honors including Dell EMC Enterprise Solution Provider Partner of the Year, Juniper Innovation Partner of the Year award, and a Cisco Territory Partner of the Year award.

In a recent interview, Serpico said FusionStorm was growing at a double digit clip and was on track to do $1 billion in billings this year.

The deal comes with an increasing demand from large corporate customers for a global coverage.

Just three months ago, European systems integrator Getronics acquired MSP heavyweight Pomeroy, No. 43 on the 2018 CRN Solution Provider 500, in a deal that creates a $1.3 billion solution provider behemoth with 9,000 employees and coverage in more than 110 countries. Terms of the deal were not disclosed, but the acquisition was made possible by an $815 million financing and recapitalization.