China’s HNA Group to buy US electronics distributor Ingram Micro for $6 bn

Chinese aviation and shipping giant HNA Group yesterday struck a deal to buy US electronics distributor Ingram Micro Inc for about $6 billion, the latest in a string of overseas acquisitions by Chinese companies.

Under the terms of the friendly deal, Tianjin Tianhai, a unit of HNA Group and listed on the Shanghai Stock Exchange, will pay $38.90 per share in cash, a 31.2 per cent premium to Ingram Micro's yesterday closing price.

Upon closing, Ingram Micro will become a part of HNA Group, a Hainan-based Fortune Global 500 enterprise group and the largest stockholder of Tianjin Tianhai.

Ingram Micro is expected to remain headquartered in Irvine, California, and the company's executive management team will remain in place, with Alain Monié continuing to lead as CEO.

Tianjin Tianhai will pay Ingram Micro $400 million as termination fee if the deal is blocked by the US regulators.

The deal will help the logistics sector of HNA Group transform from a logistics operator to a supply chain operator, and provide one-stop services.

Adam Tan, vice chairman of CEO of HNA Group, said, "Ingram Micro has clearly established itself as a leading distributor and global provider of IT products and services. The Company has a proven and talented team and we believe Ingram Micro is unrivaled in its ability to offer industry-leading, differentiated and easy-to-manage solutions to vendor and customer partners worldwide."

"After the transaction, Ingram Micro would become the largest member enterprise of HNA Group in terms of revenue, and facilitate the internationalization process of the group. With the help of Ingram Micro, HNA Group would have access to business opportunities in emerging markets, which have higher growth rates and better profitability,'' he added.

Alain Monié, Ingram Micro CEO, said, "As a part of HNA Group, we will have the ability to accelerate strategic investment, as we continue to capitalize on the constant evolution of technology and emerging trends by adding expertise, capabilities and geographic reach. Additionally, Ingram Micro will now be part of a larger organization that has complementary logistics capabilities and a strong presence in China that can further support the growth and profitability objectives of our vendor and customer partners."

Founded in 1979, Ingram Micro, a Fortune 500 Company, is the world's largest wholesale technology products distributor of products like desktop and notebook PCs, servers, storage devices, printers, scanners, TVs, videogame consoles, video monitors and software to over 200,000 customers, including retailers and IT reseller, in 160 countries worldwide.

With a market cap of $4.6 billion, Ingram Micro had posted 2014 net profit of $267 million on revenues of $46.5 billion.

Developed from a local aviation transportation operator to a conglomerate encompassing core divisions of aviation, holdings, capital, tourism and logistics, HNA Group's business outreach has expanded to all parts of the globe. It also owns China's Hainan Airlines.

The Group has assets worth over $90 billion, and has 11 listed companies. In 2015, HNA Group had revenues of $29 billion and employed nearly 180,000 worldwide.

Founded in 199, Tianjin Tianhai has evolved from a traditional marine shipping company into a modern logistic industry investor and operator, focusing on investment in logistic market segments, supply chain investment and management based on upstream and downstream of the logistic industry, as well as financing service for the logistic industry.

With the Ingram Micro deal, Tianjin Tianhai wull become the largest unit within the HNA Group in terms of revenue.

Chinese companies have recently been aggressively pursuing acquisitions overseas in order to overcome slowing domestic growth.

The total value of Chinese overseas acquisitions have topped $1 trillion for the first time last year and Chinese listed companies have announced nearly $24 billion of outbound deals so far this year.

But the deal will have to be approved by the Committee on Foreign Investment in the US (CFIUS), which has a history of blocking Chinese takeovers of US companies

It had blocked Germany's Deutsche Boerse AG plan to buy the owner of the New York Stock Exchange in 2011, and Last year, Chinese state-owned semiconductor company Tsinghua Unigroup, aborted its planned $23 billion bid for chipmaker Micron over fears that CFIUS would torpedo the deal.

In January this year, Dutch electronics group Royal Philips NV terminated its proposed $3.3-billion sale of its Lumileds business to Chinese private equity firm Go Scale Capital, after CFIUS  blocked the deal on national-security grounds.

This week, US chipmaker Fairchild Semiconductor rejected a $2.6 billion bid from Chinese state-backed enterprises China Resources and Hua Capital and instead opted to a lower offer from US-based ON Semiconductor citing US regulatory concerns on approving the deal.

CFIUS will now look into ChemChina's $44 billion proposed acquisition of Swiss agribusiness company Syngenta, which is the largest overseas deal by a Chinese company.