The 10 Biggest Channel Mergers And Acquisitions of 2017 (So Far)
Bulking Up Around The Data Center
Companies placed big bets on the data center, security and cloud in the first half of 2017, with eight of the period's 10 most important channel acquisitions focused around these technology areas.
Vendors, distributors and solution providers spent at least $19 billion on the year's most significant deals, acquiring nearly 130,000 employees from companies delivering more than $34 billion in combined annual sales.
Five of the acquired entities are based on the West Coast, two are based on the East Coast, two are based in the Midwest, and one is based in the South. Five of the acquisitions were carried out by the 200 largest solution providers on the CRN SP 500, three were enacted by private equity firms, and two were carried out by a distributor.
Here's a look back at the 10 most pivotal deals in the channel.
(For more on the "coolest" of 2017, check out "CRN's Tech Midyear In Review.")
10. Thoma Bravo Acquires Continuum
Head count: 1,400 employees
Annual sales: Not disclosed
Purchase price: Not disclosed
Deal closed: June 14
Private equity giant Thoma Bravo purchased global IT management platform provider Continuum to boost organic growth and M&A activity in the SMB security space.
Boston-based Continuum is looking to build an end-to-end security offering tailored to small and midsized businesses, according to Continuum CEO Michael George. The offering will include perimeter and endpoint defense, firewall-level security, anomaly detection, the ability to isolate a problem to a particular user's system, and remediation through its existing tools, George said.
This is not Thoma Bravo's first foray into the IT service management space. The Chicago-based firm partnered with Silver Lake in October 2015 to purchase IT infrastructure management vendor SolarWinds, owner of SolarWinds N-Able (now SolarWinds MSP), and eight months later combined it with newly-acquired IT services management firm LogicNow.
9. Systems Maintenance Services Merges With Curvature
Head count: 600 employees
Annual sales: $288 million
Purchase price: Not disclosed
Date of announcement: Jan. 18
Systems Maintenance Services (SMS) and Curvature announced plans to merge in a deal that creates a $500 million market leader in third-party maintenance services.
The transaction creates an IT asset lifecycle services powerhouse with 2,200 employees and a broad range of third-party data center services and hardware offerings that include server, storage and networking.
John Wozniak, CEO of Charlotte, N.C.-based SMS, No. 85 on the 2017 CRN Solution Provider 500, will serve as CEO of the combined company, while Mike Sheldon, CEO of Santa Barbara, Calif.-based Curvature, also No. 85 on the CRN SP 500, will serve as president and chief commercial officer.
SMS | Curvature will be more than four times larger than its closest competitor, Cleveland-based Park Place Technologies, No. 208 on the CRN SP 500.
8. HTC Global Services Acquires Ciber
Head count: 3,550 employees
Annual sales: $275 million
Purchase price: $90.7 million
Deal closed: June 8
HTC Global Ventures, No. 189 on the CRN SP 500, won a U.S. Bankruptcy Court auction to buy Ciber, No. 43 on the 2016 CRN SP 500, in an unexpected twist to Ciber's Chapter 11 bankruptcy proceedings.
Troy, Mich.-based HTC's bid vastly exceeded the $50 million "stalking horse" agreement Greenwood Village, Colo.-based Ciber reached with Paris-based Capgemini, No. 6 on the CRN SP 500, in April when it filed for Chapter 11 bankruptcy. The filing came after Ciber defaulted on its credit facility from Wells Fargo, which had an outstanding balance at the time of $28.5 million.
"The purchaser is uniquely positioned to acquire the purchased assets [Ciber] as HTC Global has the capabilities and experience in delivering similar services and solutions spanning across a large number of clients in multiple industries," Madhava Reddy, HTC's president and CEO, wrote in a May 18 court filing.
7. KKR & Co. Acquires Optiv Security
Head count: 1,462 employees
Annual sales: $947.3 million
Purchase price: $2 billion
Deal closed: Feb. 1
Optiv's acquisition by private equity firm KKR & Co. will allow the Denver-based company, No. 27 on the CRN Solution Provider 500, to turn its sights on the global security market.
The company's previous owner, the Blackstone Group, helped form the company by orchestrating the merger between Accuvant and FishNet Security. Blackstone will maintain a minority interest in Optiv.
As one of the world's largest private equity firms, KKR would prove critical as Optiv looks to establish its foothold in some nations and expand its presence in others, CEO Dan Burns told CRN in December 2016.
Having KKR as a parent will additionally allow Optiv to invest further in its cloud security portfolio, Burns said, focusing on areas like identity and access management, data loss prevention, and data security and services.
6. DXC Technology Acquires Tribridge
Head count: 740 employees
Annual sales: Not disclosed
Purchase price: Not disclosed
Deal closed: July 1
DXC Technology's first-ever acquisition was the purchase of Microsoft Dynamics 365 solution provider Tribridge and its managed cloud business Concerto Cloud Services.
Tysons, Va.-based DXC, No. 11 on the CRN SP 500, said its acquisition of Tampa, Fla.-based Tribridge, No. 165 on the CRN SP 500, will enhance DXC's offerings in health care, state and local government, consumer packaged goods, and professional services.
Tribridge offers mid-market and enterprise customer software services and cloud solutions in the areas of finance and operations, customer engagement, and human capital management. The company's proprietary Dynamics 365 software management focuses on the health care, justice, and public safety verticals.
Tribridge is a six-time Dynamics 365 Worldwide and U.S. Partner of the Year winner.
5. Apollo Global Management Acquires West Corp
Head count: 10,700 employees
Annual sales: $2.29 billion
Enterprise Value: $5.1 billion
Date of announcement: May 9
Private equity behemoth Apollo Global Management agreed to purchase Omaha, Neb.-based telecom service provider West Corp, No. 24 on the CRN Solution Provider 500, in hopes of capitalizing on customer migration to cloud-based solutions.
"Over the past six months, we have evaluated a wide range of strategic and financial alternatives, including the sale or separation of assets; various balance sheet options; as well as continuing to operate under our current structure," Tom Barker, West Corp's chairman and CEO, said in a statement. "We believe strongly that the transaction we are announcing today is the best outcome."
The transaction is expected to close in the second half of the year, with shareholders owning some 45 percent of West's outstanding common stock already committed to voting in favor of the deal.
4. Insight Enterprises Acquires Datalink
Head count: 570 employees
Annual sales: $771 million
Purchase price: $258 million
Deal closed: Jan. 6
Insight Enterprises bought Datalink, one of the channel's largest pure-play data center solution providers, to strengthen its data center services offerings around hybrid cloud, converged and hyper-converged infrastructure.
Tempe, Ariz.-based Insight, No. 13 on the CRN SP 500, said its purchase of Eden Prairie, Minn.-based Datalink, No. 45 on the 2016 CRN SP 500, will make the company a force to be reckoned within data center architecture.
Insight CEO Ken Lamneck said in December that he was impressed by Datalink's technical and architectural capabilities around the private cloud, which far exceeded Insight's internal capabilities. As a result of the acquisition, Lamneck said Insight went from having pockets of architecture-focused engineering talent to having hundreds of people with experience in that marketplace.
3. Synnex Acquires Westcon Americas
Head count: 4,271 employees (all of Westcon)
Annual sales: $2.18 billion
Purchase price: $830 million
Date of announcement: June 6
Synnex will burst onto the Cisco scene by purchasing Westcon-Comstor's North American and Latin American businesses.
The Fremont, Calif.-based distributor will also take a 10 percent stake in Westcon-Comstor's International business, which includes Europe, the Middle East and Africa, and Asia-Pacific. Synnex will have the option to acquire an additional 10 percent interest in Westcon International for another $30 million.
Synnex had been the only North American broadline distributor not carrying Cisco, while 44 percent – or $2.16 billion – of Tarrytown, N.Y.-based Westcon's sales come from its Cisco-exclusive Comstor business. The acquisition is expected to close in the third quarter of 2017.
2. Tech Data Acquires Avnet Technology Solutions
Head count: 6,200 employees
Annual sales: $9.65 billion
Purchase price: $2.6 billion
Deal closed: Feb. 27
Tech Data's acquisition of Avnet Technology Solutions boosted the Clearwater, Fla.-based distributor's share of overall revenue coming from the data center from just 29 percent to 45 percent while more than doubling non-GAAP operating income after cost savings.
The post-acquisition Tech Data has more than 14,000 employees in 40 countries serving some 115,000 customers in more than 100 countries. Following the departure of TS, Avnet is now a pure-play semiconductor distributor.
Avnet TS partners hoped they can unlock access to a broader line card as part of Tech Data while still maintaining a relationship with their key existing pre-sales and marketing contacts. The deal also, for the first time, gives Tech Data a presence in the Asia-Pacific region.
1. CSC Merges With HPE Enterprise Services, Forms DXC Technology
Head count: 100,000 employees
Annual revenue: $18 billion
Value of merger for HPE shareholders: $8.5 billion
Deal closed: April 3
DXC Technology officially opened for business with 170,000 employees and $26 billion of annual sales after Tysons, Va.-based CSC, No. 8 on the 2016 CRN SP 500, closed its merger with Palo Alto, Calif.-based HPE Enterprise Services, No. 3 on the 2016 CRN SP 500.
The world's third largest solution provider said it is focused on stabilizing revenue, developing next-generation talent, and driving digital transformation. DXC is trying to turn around the middling fortunes of CSC and HPE ES through heavy investment in emerging technologies and a series of tuck-in acquisitions.
DXC CEO Mike Lawrie told investors in march that the CSC and HPE ES brands "were sort of tired," with CSC being "'me too' for a lot of years" and HPE ES being "a captive channel distribution for technology." The company expects overall revenue growth of 1 percent to 4 percent through 2020.