martinwolf Transaction Analysis

Financial Information

• Financial information was not disclosed.

Transaction Facts

• Arrow Electronics (NYSE:ARW), a global solution provider with $22.8B annual revenue, announced today that it was acquiring value-added distributor immixGroup for an undisclosed amount. immixGroup, #37 on the CRN SP500 list, was reported by the Washington Business Journal to have posted $920 million in revenue for 2013.
• Once the transaction is closed in Q2, immixGroup will retain its focus on the government market and operate as subsidiary of Arrow. According to USAspending.gov, immixGroup had $418.3 million in federal sales in FY2014.
• Arrow expects the acquisition to be $0.10 to $0.14 accretive to EPS, excluding the impact of amortization.

• Hybrid Appeal: This deal continues a recent pattern of distributors looking to expand their IT capabilities in search of higher margins, particularly as the rise of the cloud has impacted traditional hardware revenue. Partnering with customers to reach end users directly offers distributors an opportunity to add or enhance service offerings to their portfolios.
• Managing Conflict through Targeted Acquisitions: Immix has both direct and indirect sales businesses. Arrow has been able to successfully manage internal conflicts between its Avaya/Nortel and S3 businesses, in part by making targeted acquisitions that provide additional service offerings for their reseller customers.
• Expanding Presence in Active Space: The government sector, traditionally steady though not fast growing, has seen increasing activity with this deal and January’s acquisition of DLT Solutions by Millstein & Co. Arrow, whose federal government sales are roughly 5 percent of those of immixGroup, will with this acquisition benefit from access to new customers and vendors.