Ingram Micro Finalizes $7.2B Acquisition By Platinum Equity, Unshackled From Chinese Ownership

Ben Johnson, CEO of Liberty Technology, a Griffin, Ga. solution provider, said the IT industry is under “increasing pressure” to steer the supply chain away from China in the wake of human rights issues and questions about the origin of the Coronavirus. “I do not think the timing of this was coincidental” given the political situation with China, he said.

Ingram Micro has officially closed its $7.2 billion acquisition by private equity powerhouse Platinum Equity in a blockbuster deal that frees the distributor from financially troubled Chinese conglomerate HNA Group.

The deal–which was expected to be finalized by the second quarter of 2021--took seven months to complete.

Ben Johnson, CEO of Liberty Technology, a Griffin, Ga. solution provider, said the IT industry is under “increasing pressure” to steer the supply chain away from China in the wake of human rights issues and questions about the origin of the Coronavirus. “I do not think the timing of this was coincidental” given the political situation with China.

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If Ingram Micro remained under Chinese ownership that had the potential to negatively impact the distributor in the future, said Johnson. “I’d love to see Ingram reset their focus on SMB sellers and deliver on value on the channel,” Johnson said. ”Distribution today has major challenges especially adding value to as a service/software sales. Maybe they can use this as a chance to reflect and refocus on their roots.”

Now that the deal is done, it sets up an epic battle for distribution dominance between Ingram Micro and Tech Data-Synnex which will become the world’s largest distributor when it completes its merger in the second half of this year. That blockbuster Tech Data Synnex deal undoes Ingram’s three decade reign as the world’s largest distributor

Platinum Equity Chairman and CEO Tom Gores said in a prepared statement that Platinum is “excited” to put its “resources and experience to work helping Ingram Micro navigate these especially fluid times.” He said corporate IT priorities are “shifting, ecommerce is thriving, and the pace of digitization continues to accelerate,” which makes Ingram’s technology products,services and adanced solutions “more important than ever.”

Platinum Equity Partner Jacob Kotzubei, whose team has led multiple technology transactions, said in a prepared statement the Ingram Micro deal is the “culmination of more than a decade investing” in the technology and IT distribution space.“We know the industry well and our team is ready to hit the ground running,” he said.

“With a strong balance sheet and access to Platinum’s financial and operational resources, Ingram Micro has a lot of attractive opportunities ahead,” said Kotzubei.

Ingram Micro CEO Alain Monie said in a prepared statement Ingram is excited to begin its future with a “prominent US based partner with the desire and substantial resources to accelerate” it innovation and vendor and customer services.

“Platinum shares our vision for Ingram Micro and is dedicated to us continuing to develop and offer innovative solutions across the IT ecosystem, while providing a superior experience for our customer and vendor partners and a work environment where our associates can thrive,” said Monie.

The Platinum ownership comes five years after HNA Group purchased Ingram Micro for $6 billion. HNA Group’s ties to the Chinese government were always a concern for Ingram Micro’s partners, despite reassurances that the company was “ring-fenced” from Beijing’s influence by U.S. treaties.

However, HNA has over the past few years seen its fortunes fall. The company made multiple acquisitions outside of China over the years in a wide range of industries, including that of Ingram Micro, but eventually overstretched itself to the point at which it now faces bankruptcy.

Even as HNA’s fortunes floundered, Ingram Micro has continued to grow. The company has more than 35,000 employees, 170,000 customers, and partnerships with more than 2,000 vendors.

Synnex and Tech Data combined will have combined revenue of $60 billion, coming in nearly $11 billion larger than Irvine, Calif.-based Ingram Micro, which had $49.1 billion in sales in fiscal year 2020.