German distributor Raab Karcher has spent $810 million on a US rival in electronics and computer distribution, Wyle Electronics, in a move to become a global business.
The price represents a 40 per cent premium on Wyle?s market capitalisation and the move poses a threat to $5.6 billion electronics distribution leader Arrow Electronics. Raab Karcher admitted the main drive behind the buy was to expand its international operations. Other distribution companies with sales over $5 billion, including Computer 2000, Ingram Micro and Tech Data, have also stated their intent to acquire to become worldwide businesses.
Wyle specialises in semiconductor, peripheral, terminal and storage distribution. It acquired European businesses in Denmark, Finland, France, Germany, Sweden and the UK with its takeover of The Ginsbury Group in January 1996 to become Wyle Ginsbury, which acquired UK semiconductor programming business Welwyn Technologies six weeks ago.
The acquisition is the biggest in Raab Karcher?s history, according to company CEO Georg Kulenkampff, who said the combined business will become a global player in worldwide distribution markets.
Raab Karcher will take on Wyle?s debt but the US company is not in the red - it made $74 million profit on turnover of $1.2 billion in 1996. The combined companies? electronics and computer distribution businesses will not lay off any staff, will operate independently and will boast total sales of approximately $3.0 billion, they said.
Undeterred by a similar but disastrous deal in 1995, when German rival Computer 2000 entered the US market by acquiring loss making wholesaler Ameriquest, Raab Karcher president Ferdinand Pohl said: "Wyle is an excellent company, widely recognised as a leader in the electronics distribution industry."
Raab Karcher, which reported turnover of $7.0 billion in 1996, is the parent company of EBV Electronics, Memec, Insight and Raab Karcher Electronic Systems. Raab Karcher completed a restructure to maintain profitability last year, when it shed businesses with turnover of around $7.0 billion. It is part of Germany?s fourth largest company, industrial conglomerate Veba Group, which had sales of around $50 billion in 1996.
Buy cheap, buy twice...
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