"A business, like an automobile, has to be driven in order to get results."
-B.C. Forbes
November 07,2014
CDW Acquires Minority Stake in Kelway for $380 Million
martinwolf Transaction Analysis
Financial Information*
- Enterprise Value: £240 Million ($380 Million USD)
- EV/2014 Revenue: 0.46x
- EV/2014 EBITDA: 7.27x
Transaction Facts
- IT Solution Provider CDW (Nasdaq:CDW) announced yesterday it had acquired 35 percent of privately-held UK-based solution provider Kelway, with the ability to acquire the remaining 65 percent by mid-2017.
- While this transaction is CDW’s first acquisition outside of the United States, the two companies have been strategic partners for the past 18 months.
- Financial information for the transaction was not officially disclosed, but valuations from media reports are in-line with industry valuations for solution providers as tracked by the MW Scoreboard.
Search for Growth Leads to Familiar Partner
- Serving Cross-Border Enterprise Clients: Acquiring UK-based Kelway strengthens CDW’s ability to serve cross-border enterprise accounts, positioning the company well for future growth and providing more control, particularly as it builds its services offerings.
- Pushing Beyond Traditional Limits: CDW has not been acquisitive in the past – its last major acquisition was of Berbee Information Networks in Sept. 2006 for $184 million. However, CDW previously had a strategic partnership with Kelway, and slowing growth in CDW’s core markets has led the company to consider converting this partnership to an outright acquisition.
- PE Exits After Strong Growth: It was reported last year that Kelway had outgrown PE backer Core Capital. Beginning with a £5 million investment in Nov. 2006, their partnership has grown to £8.5 million while revenue grew from £45 million to £530 million in a combination of organic growth and seven acquisitions. According to media reports, Core Capital is receiving a significant payout of £76 million ($120M) in exchange for its 29 percent equity stake.
- CDW Sees Opportunity to Remain on Top: CDW has remained at the top of its peer group since it held its IPO in June 2013. By acquiring a longtime partner, and completing the acquisition in stages rather than buying Kelway outright, CDW is opting for a high-potential expansion while reducing integration risk.
For more information, view the press release by clicking here. martinwolf was not the advisor in this transaction.
*Financial information was not disclosed publicly, but media reports citing persons familiar with the matter provided the figures included above.
