Synnex's $800 million agreement to purchase distributor Westcon-Comstor could help unify product sets in communications and cybersecurity, while avoiding significant overlap.
Synnex Corp.'s pending purchase of Westcon-Comstor's Americas business could help channel partners provide more unified offerings in communications and security.
The distribution deal, expected to close in the third quarter, involves Datatec Ltd., Westcon-Comstor's parent company, selling the Americas operation to Synnex for up to $800 million. Synnex will also buy a minority stake in Westcon-Comstor's EMEA and Asia-Pacific businesses.
In Westcon-Comstor, Synnex is acquiring a distributor with a history in networking and communications. Indeed, David Grant, executive vice president of global partner sales and business operations at Westcon-Comstor, based in Tarrytown, N.Y., cited his company's Cisco business as one attractive attribute from the Synnex perspective. But Grant said the communications aspect goes deeper than Cisco for the two IT distribution companies.
He also noted the synergy between Westcon-Comstor's relationship with voice and video conferencing vendor Polycom and Synnex's position with Microsoft's emerging communications technology.
Polycom, a Microsoft unified communications (UC) partner, offers integration with Skype for Business, among other Microsoft offerings.
And while those vendor ties could help unify UC solutions for channel partners, a similar connection can be found in the cybersecurity field. Grant said Synnex has been a Symantec distributor for a number of years, providing "a very strong capability" in the midmarket, small-business and government sectors. Weston-Comstor, meanwhile, has been working in the enterprise space with Blue Coat, a cloud access security broker vendor. Symantec acquired Blue Coat in 2016, he added.
The result, Grant said, is "a single distributor that can cover all three of the market segments, plus government, plus cloud."
Vendor reaction
Grant, who said he spent Tuesday morning in San Jose, Calif., meeting with a number of Westcon-Comstor's top vendors, said the reaction to the acquisition news has been positive. He said vendors are "not anxious about product overlap and see this as a very complementary acquisition."
We believe this to be a very synergistic announcement, as the two entities do not appear to have a lot of overlap with each other.
Kevin HickeyCEO, BeyondTrust
Kevin Hickey, CEO at BeyondTrust Inc., a Phoenix-based vendor that joined Westcon-Comstor's Accelerate program last year, said the acquisition is good news for the information security software company.
"We believe this to be a very synergistic announcement, as the two entities do not appear to have a lot of overlap with each other," he said in a statement. "For BeyondTrust, we believe this will expand the network of security-focused resellers through the combined entity."
Hickey said BeyondTrust is working with Westcon-Comstor to make its privileged account management, vulnerability management, and Windows auditing and security offerings available through BlueSky, Westcon-Comstor's cloud platform. BeyondTrust is also looking to establish systems integrator and managed service provider relationships via Westcon-Comstor's global integrator and solution provider team, he added.
Cloud influences IT distribution companies
The Westcon-Comstor acquisition is the latest in a series of transactions among IT distribution companies. In late 2016, Tianjin Tianhai, a shipping company based in China, purchased Ingram Micro for $6 billion. And earlier this year, Tech Data completed its $2.6 billion purchase of Avnet Inc.'s Technology Solutions business.
Diane Krakora, CEO of PartnerPath, a channel partnering consulting firm in Menlo Park, Calif., said one thing the distribution deals have in common is the impact of cloud computing.
"I believe it's greatly influencing the distributor M&A [merger and acquisition] spree," she said. "The value proposition for traditional distribution -- pick, pack, ship and a bank -- is a tough sell as the industry transitions to cloud consumption models. [It's] not to say they won't figure out how to aggregate cloud solutions and provide provisioning and billing services to the partners -- it's just a transition for the distributors, as well as the resellers."
Krakora said she believes distributors are looking for operational efficiencies, as well as opportunities to charge higher margins for value-added services.
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