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Technology Stocks : HS - CHS Electronics -- Ignore unavailable to you. Want to Upgrade?

To: Ron Kline who wrote (653)	6/10/1998 8:26:00 AM
From: Ginco	Respond to of 1494

Supercom Poised For Sale, Merger Milpitas, Calif.-Supercom Inc., a $750 million distributor based here is poised for a sale or merger. "I want the business to be bigger, whether that's through an acquisition or merger, or whatever route [is most appropriate]," says Jim Fang, the distributor's president. One possible suitor is CHS Electronics, Miami, which has announced its intention to expand into the United States market. CHS is currently entirely focused on the overseas market. The question is whether a distributor such as Supercom, with a local presence in 16 cities across the country, is big enough to achieve CHS' goals. What Supercom has to offer is its local presence and its configuration/assembly capabilities. A potential suitor will likely be a company that needs a new small to midsize customer base or to get more heavily involved in channel assembly and configuration. As Supercom shops for the right deal, it faces some competition. Pinacor, Tempe, Ariz., a $2.8 billion distribution subsidiary of MicroAge Inc., has hired an undisclosed investment firm to help it decide what to do. The options: an IPO, a merger, a spin-off or a sale. One industry insider says a sale is the most likely option, particularly given the consolidation trend in the industry. Pinacor or Merisel, El Segundo, Calif., could make a good initial buy for CHS. Merisel Inc. has been rumored to be on the selling block. Company executives have denied those rumors. Clearly, the industry's consolidation is far from complete. "The whole industry is looking for mergers and acquisitions," Supercom's Fang says. "People are trying to consolidate. That's what we're looking for." Investment banking institutions such as The Robinson-Humphrey Co. in Atlanta and Cleary-Gull Reiland & McDevitt Inc. in Milwaukee are the kinds of companies most intimately involved in these high-stakes deals. "As a general rule, those companies that are less than a billion dollars need to grow rapidly or get acquired," says Ajoy Bose, partner with Cleary-Gull. "You have to be several billion dollars in revenue to play as a distributor. The trend is toward globalization and channel assembly and value-added services. You have to have the economies of scale to do that." Bose draws a parallel between the computer industry and the pharmaceutical industry, noting that there were 50 or 60 pharmaceutical distributors roughly a decade ago. Now there are only four or five main distributors, all with revenue of approximately $3 billion to $4 billion. Says Bose, "The [drug] manufacturers wanted them to be global and large, and I think that's what's happening here, too." -Karen Franse