Original Source: FD (FAIR DISCLOSURE) WIRE
. Ria Carlson, Ingram Micro Inc., VP, Corporate Communications & IR
. Kent Foster, Ingram Micro Inc., Chairman & CEO . Tom Madden, Ingram Micro Inc., EVP & CFO . Greg Spierkel, Ingram Micro Inc., President
IM to acquire Tech Pacific for a total purchase price of Australian $700m or approx. $493m. This acquisition clearly supports IM's Asia-Pacific strategy. IM expects the transaction will be accretive to earnings for 2005. The Co. expects integration to begin following the close of the transaction. Q&A Focus: Tech Pacific's revenue growth, operating margin, credit lines, expected revenue loss, products, logistics business, working capital metrics, and vendors.
A. Key Data From Call 1. Total purchase price = Australian $700m or approx. $493m.
S1. Acquisition Details (K.F.) 1. Overview: 1. This morning the Co. announced the transaction that gives it a leap forward in the strengthening of its Asia-Pacific region. 2. IDC has forecasted strong IT spending growth in the region through 2008. 3. China and India are two of the most rapidly growing markets in
the world. 4. IM will become the leading distributor in the stable markets of Australia, New Zealand, and Singapore as well as the high-growth market of India, where the Co. already has a strong presence. 5. Through the dedication of IM's associates in the region, the Co. has been turning around its operating losses this year by carefully managing topline growth in favor of healthier operating margins. 6. With this acquisition, the Co.'s timeline has significantly accelerated. 7. By next year, the Co. expects this region to become a solid performer with operating margins approaching those currently in the other regions. 2. Tech Pacific: 1. Tech Pacific, has a strong track record. 2. Sales growth has outperformed the overall market and every country-based business unit generated an operating profit last year. 3. Sales for 2003 had Australian $3.1b, or similar to those of the Co.'s Asia-Pacific region. 4. Tech Pacific, however, delivered an operating margin of approx. 200 BP while IM operated at a loss. 5. This acquisition clearly supports IM's Asia-Pacific strategy. 3. Key Strategic Benefits: 1. IM Asia-Pacific will roughly double in size in terms of revenues, becoming the region's largest IT distributor. 2. The Co. will be the market leader in Australia, India, New Zealand, Malaysia, Hong Kong and Singapore and have a significant presence in Thailand and China. 3. Profitability for the region will improve significantly,
favorably affecting the regional operating margins for FY05.
4. IM expects operating margins to approach the existing levels
experienced by the Co.'s other regions. 5. Alain Monie, regional President, will continue to lead the region, but Tech Pacific management will be retained, adding depth and expertise to IM's existing team. 6. IM is confident that the transaction will benefit its customers and vendors. 1. The combined entity will have unparalleled product portfolio spanning systems, networking, peripherals, software, components, consumer electronics and telecommunications. 7. IM expects the transaction will be accretive to earnings for 2005. 8. IM has a strong engine in North America and another in Europe, and now Asia-Pacific will be pulling for the IM team.
S2. Financial Summary (T.M.) 1. Transaction Summary: 1. All Tech Pacific financial information was prepared in accordance with Australian GAAP. 2. Although Australian GAAP differs from US GAAP, IM does not expect those differences to be significant, except the financial information will be stated in US dollars. 3. The total purchase price is Australian $700m or approx. $493m,
which will be satisfied through a combination of cash and the
assumption of Tech Pacific debt. 4. IM will initially fund the transaction with available cash on hand, or from existing financial capacity. 5. The Co. expects to close by the end of the year, subject to customary closing conditions. 6. IM expects the transaction to be accretive for 2005. 7. IM expects costs and operational synergies, offset by some revenue loss due to market overlap in certain countries. 8. At the close of the transaction, IM will provide estimates that will take into account several factors, such as cost synergies and operational efficiencies, integration costs and timing, financing …