Anglo-Irish distributor Commtech has confirmed that it has reached a definitive acquisition agreement to be bought by its rival Arrow.
Commtech founder and CEO Justin Owens said the deal was completed on Friday, remains subject to competition approval, and is set to close in Q4.
Owens said Arrow is a “natural fit” for Commtech, whose largest vendors are Dell-EMC and Pure Storage. It also works with the likes of Rubrik, SonicWall and DataCore.
He said that putting its business in with Arrow will allow it access to Arrow’s wide vendor portfolio, and also to the investments Arrow has made in platforms and cloud.
Founded by Owens in 1997 as a Cisco and Symatec consultancy, 40-employee outfit Commtech moved into trade-only distribution in 2002. It launched a UK office in 2012 and the UK now generates half of its circa €100 million sales.
The Commtech brand will probably be integrated into Arrow next year, Owens said.
Arrow has a heritage of snapping up local VADs and wrote a cheque for security specialist Computerlinks in 2013 and Sphinx in 2010.
Distributor Arrow has seen a double-digit drop in its European enterprise computing sales.
Driven by a 16 percent hike in component sales, the NYSE-listed outfit’s revenues rose eight percent annually to $6.47 billion in the three months ending 1 July 2017.
Q2 net profit hit $100 million, down on the $134 million recorded a year earlier, although adjusted for certain items the figure rose marginally to $160 million.
It was not completely bleak. The company had hit the high end of its quarterly guidance but Arrow’s Enterprise Computing Solutions (ECS) arm’s sales continue to head south, falling six percent to $2 billion globally. Its operating profit fell by two percent.
In Europe, ECS’ sales slumped by 10.9 percent to $720.3 million. In local currencies, European ECS sales fell 7.3 percent to $641.7 million.
Arrow CEO Michael Long said: “Our industry-leading infrastructure software and cloud portfolio produced strong growth again this quarter, but were offset by declines in legacy hardware.”
Arrow Business Communications has written a cheque for the London-based Worksmart Technology.
Arrow’s recently appointed managing director John Harber said the acquisition was made for as all the normal reasons such as getting new customer relationships. However now Arrow had its own hosted Mitel platform in our its data-centre.
This means that it can flog hosted telephony to punters and will be in complete control of the proposition from start to finish.
Workspace will join the Arrow group of companies with a revenue of £4.7 million, adding to the £24.6 million that Arrow filed for 2015.
Harber said that Arrow’s acquisition strategy is not yet complete – with the VAR still on the hunt for additions that will complement the firm from geographic and product perspectives – but remained tight-lipped on when the next deal will happen.
Harber started at Arrow earlier this month, after leaving his role as UK general manager at Lenovo. He held the same role at Sony earlier in his career.
The Global Technology Administration Council (GTDC) claims that vendors are increasingly relying on the channel when it comes to their cloud offerings.
The GTDC – whose associates cover Tech Data, Ingram, Avnet, Arrow, Westcon, Exclusive Networks and Scansource, claim that distributors will be dependant on the channel to bring cloud solutions to market and wrap services around cloud offerings.
“The emergence of cloud has transformed distribution along with the IT industry. Increasingly, vendors are relying on the channel to bring cloud solutions to market and that won’t change in 2017,” the report said.
Already Microsoft has indicated that it will use the channel more in 2017 to give it more opportunity as to expand its public cloud assets.
The role distribution will play in the cloud has often been questioned, with some in the industry warning distributors need to evolve or risk becoming irrelevant.
In the GTDC report Wayne Peters, senior director of Arrow Capital Solutions at Arrow highlighted financing as an important role that distributors will play in 2017.
“Cloud financing is becoming a critical component of selling cloud. In many cases, it takes what has traditionally been called non-traditional financing, but soon will become traditional financing as more solution providers get used to selling cloud and customer demand accelerates.
“We are also seeing a shift in the market with respect to the cloud ecosystem requirements and our partners selling and finance cloud.
“Some of the things we do around recurring revenue and bringing new partners into the ecosystem helps our base become broader and makes cloud easier for partners to sell,” the report said.
French-based Exclusive Group has poached Arrow executive David Ellis to head up the distributor’s global services.
Exclusive says Ellis will use his experience in supporting new and disruptive technologies to roll out new services offerings for the cybersecurity marke, which probably means the outfit’s cloud services.
Barrie Desmond, COO of Exclusive Group, said that the company was seeing more global deals and our ability to support these will add even more value to our vendor and channel partners.
“Global services are a key part of our growth strategy over the next three to five years and Ellis will play a crucial role in achieving this. I’m pleased to welcome him on board and looking forward to working with him for what promises to be an exciting journey ahead.”
Ellis was a key manager for Arrow in EMEA, responsible for vendor business development and the roll-out of new propositions. Before that, he was director of New Technology and Services at Computerlinks before its acquisition by Arrow. In his 13 years with Computerlinks he built and grew an e-Security offering before assuming responsibility for services, emerging technology and market sectors.
He said that Exclusive has built an enviable reputation for disrupting traditional value-add distribution and I’m really excited to now be part of this.
“In my time within the industry I’ve identified and brought to market a number of new technologies and services, and have seen the cybersecurity market evolve at breakneck speed. I can’t wait to start helping our vendor and channel partners achieve even more value from their relationship with Exclusive Group through new global service offerings.”
It seems that not all are happy with what is happening at EMC now that Dell is fairly certain to get his paws on the company.
Gary Matson began working at EMC in October as district manager after joining from Arrow. Now he has left the company after four months to lead Pure Storage’s UK and Ireland (UKI) channel.
His new job is as a sales professional with Distribution, Vendor, SI, and ISV experience working with partners to deliver IT solutions.
Neither Pure Storage nor EMC were immediately available to confirm the move or comment, but Matson updated his LinkedIn profile this week.
For those who came in late, Pure Storage and EMC are rivals and there is much bad blood between them. A number of EMC staff have defected to Pure Storage over the past year or so.
In fact his this time last year, EMC’s former UK boss James Petter cleaned out his desk and headed over to Pure Storage . EMC’s chief marketing officer Jonathan Martin left the company to take on the same job at Pure Storage.
Pure Storage is big on the channel. In a recent 10-Q filing published last month. It promised to continue to invest in the channel programme and boost its global channel network. To be fair, so is Dell and EMC, but it is unclear why EMC is losing its talent to such a smaller outfit.
Lenovo has chosen Arrow to distribute its storage and server products in the UK and Ireland.
The move means that Arrow will aim to sell Lenovo’s server and storage products to SMEs through the channel.
Nick Thurlow, who runs Arrow’s enterprise business said that the partnership makes commercial sense ofr his company. “Arrow looks forward to working with Lenovo as it expands its offerings for the next generation data centre.”
The vendors known as Lenovo and EMC chipped in. Darren Phelps, Lenovo channel man for the UK and Ireland said Arrow has experience in distributing large and small scale projects directly through channel programmes.
EMC channel man Terry Beale said that Lenovo’s servers have been certified within the EMC and VSPEX reference architecture.
What is means is that Arrow will distribute Lenovos entire server and storage range.
Arrow has signed an agreement with Trend Micro to offer resellers access to its security offerings as part of the ArrowSphere xSP platform.
This gives suppliers and resellers of value add IT services to help sell products to customers.
Arrow will distribute a range of Trend Micro offerings whether for email security or server protection including OfficeScan, Mobile Security, and Deep Security. The last includes anti-malware, verifying web sites, firewall, intrustion prevention, integrity monitoring, log inspection and virtual patching.
Eric Taillard, VP in charge of cloud services at Arrow ECS said that customer demand for cloud security services remains high. “It is an essential building block for value added resellers,” he said.
Meanwhile, Martina Mulas, senior manager in charge of SMB sales and marketing at Trend, said that the distribution agreement will help it “step up” its relationships with MSP resellers. Last year it introduced its MSP programme and partners are moving to managed services and pay as you go buying.
Data management firm Quantum Corp said it has recruited Arrow Electronics as a distributor in EMEA.
Its logic is that it wants to provide better support for its VARs and to recruit VARs in new markets.
Jesper Trolle, VP for Arrow enterprise said: “We look forward to helping Quantium’s reseller partners grow business through our pan-European presence, our data centre enterprise experience, and in customer training.”
That will include big data management, he said.
Quantium said: “Arrow’s pan-EMEA reach will provide strong support for continued expansion into new market and help us drive further growth in our existing markets.”
Arrow (tick: ARW) releases its Q3 results at the end of this month.
Citrix has appointed Arrow Electronics as its first pan-European distributor to further expand the European channel for the SaaS.
Under the deal, Citrix SaaS products will be available on the ArrowSphere cloud services platform. This means that Arrow resellers can market and sell Citrix SaaS products through their webstore or using ArrowSphere white-label webstore functionality.
The ArrowSphere webstore platform was launched by Arrow in July 2012 and is “live” in the UK, France, Spain, Germany and Denmark. The ArrowSphere platform will continue to roll out to other markets in Europe.
Robert Gratzl, vice president and general manager EMEA for Citrix’s SaaS products said the agreement with Arrow is an important step in extending our pan-European reach and helping our customers embrace mobile workstyles and new ways of working.
“We selected Arrow and its ArrowSphere webstore platform because they were taking a highly innovative approach to SaaS products to their reseller and customer community,” he said.
The collaboration is another step in the expansion and implementation of the Citrix SaaS Advisor (CSSA) programme launched in May.
It aims to use a local and regional approach with strategic partners to deliver Citrix SaaS applications as part of a broader solution means it is easier than ever for partners and customers to benefit from Citrix technology.