Distributor Propalms has acquired Arc Technology for an undisclosed amount, and has hinted that acquisition of another distributor is on the way.
Filtering software specialist Propalms, which was formed in August 2001, financed the deal itself. The combined company will be known as Arc Technology.
Propalms managing director Owen Dukes said: "It is a better-known brand name among the resellers and we want to retain it."
The takeover of Arc sees Propalms, which traditionally operated in the URL and mail filtering market, move from selling one product to more than 20.
With the aquisition of Arc, Propalms adds divisions in the connectivity, database server management and IT support markets and increases its reseller base from 40 to over 300.
Dukes said the company will grow from £2m revenue last year to £20m in the next two years, through a mix of acquisitions and organic growth.
"This is viable and we plan to grow nationally and internationally through acquisition and organically," he said, adding that the company is currently in negotiations to acquire another UK distributor.
Stuart Reay, former sales director at Arc, and now sales and marketing director at the 'new' Arc, said the distributor had been supplied filtering products by Propalms.
"We were growing out business together and thought it would be interesting to put the businesses together," he said.
Ian Kilpatrick, managing director at distributor Wick Hill, said Arc Technology has a good technical reputation, and merging specialist distributors is a good expansion strategy amid market consolidation.
"Smaller players often struggle and it makes sense to merge," he added.
"If this is someone putting together a number of different specialists it could be a success particularly if they buy people with good reputations."
Arc, with a turnover was £8m last year, was formed by the merger of IP Connect, formerly Easy IP, and UniDirect in September 2002.
Back in late 2001 Easy IP's assets were frozen and host access software vendor Attachmate stepped in to support it as it relaunched as IP Connect. It is the sole distributor in the UK for Attachmate.
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