UK’s largest reseller/services outfit Computacenter has written a $90 milion cheque for the US outfit FusionStorm.
The move is part of a much rumoured push by Computacenter over the pond. Computacenter will pay an initial cash consideration of $70 million and up to an additional $20 million in differed payments for the San Francisco-based firm. It will also contribute $45 million to refinance FusionStorm’s existing facilities.
Computacenter CEO Mike Norris said the move would boost its ability to serve international customers and extend its reach into the US market.
Computacenter launched into the US in 2017 and it said the FusionStorm deal will boost its US headcount by 50 percent.
FusionStorm CEO, Dan Serpico is cleaning out his desk and handing the keys to the executive drinks cabinent to Computacenter US CEO Mike Keogh over the coming months.
Norris added: “This transaction broadens our capability to serve our international customers and should enhance our existing customer offer and reach into the US marketplace, whilst providing an opportunity to improve the long-term prospects for the employees of FusionStorm and Computacenter US.”
Serpico said: “Computacenter, as one of the leaders in our marketplace, offers an exciting opportunity for our employees as well as security, range of services and international coverage for our clients and partners. Out of many potential suitors, Computacenter stood out for their great cultural fit and I am very proud that we can start the next step in our company’s journey as part of this great business.”
For the year ending 31 December 2017, FusionStorm reported turnover of $595 million with a profit before tax of $3.9 million.
Computacenter however said that this profit number includes $5.2m of interest costs, which it expects to “materially reduce” as a result of the refinancing.
Computacenter has snapped up Misco’s last-remaining European subsidiary in Amstelveen in Holland.
Misco Solutions employs around 200 staff and booked revenues of €134 million last year.
Computacenter claiming to have covered the cost of the transaction using existing cash resources, which presumably means breaking into the piggy bank and looking down the back of the sofa.
The sale went through three months of negotiations and Centralpoint and Bechtle were in the frame to buy the outfit before Computacenter.
The deal marks Computacenter’s first direct presence in the Holland and should give a boost to its Benelux business.
Computacenter CEO Mike Norris said: “While we mainly focus on organic growth, we are interested in acquisition opportunities which either enable us to enter new markets or enhance our services and solutions for our customers. The Netherlands is an adjacent European market for us and we are excited by the opportunity to build the long-term trust of government organisations and some of Europe’s largest companies headquartered there. Our direct local presence in the Netherlands will also allow us to enhance our support to a number of Computacenter’s largest international clients for whom this is a key location.”
Misco’s Dutch arm is the company’s last-standing subsidiary on the continent following the collapse of Misco UK in October 2017, which preceded subsequent closures across Europe.
Computacenter has told the City that its full-year results to be “comfortably in excess of previous expectations”.
Computacenter said it has gathered traction across all geographies of its supply chain business, but Germany, in particular, stands out.
“The six months of trading to 30 June 2018 shows considerable progress for Computacenter in adjusted profitability, and even further progress in adjusted earnings per share following the buyback completed in February 2018, against the same period last year.
“While there is still a significant amount to do in the second half of the year, Computacenter’s board believes that the group’s trading result for the 2018 financial year will now be comfortably in excess of its previous expectations set out in the Q1 trading update.”
In the Q1 update, Computacenter said that the UK business had seen revenue growth of 31 percent, driven by a one off £34 million deal in particular.
Computacenter announced that its Q1 performance beat expectations, particularly around its supply chain (product supply) business.
“This leads the Board to believe that 2018 is likely to be a year of further progress for
in profitability as well as earnings per share”, it said.
It was the UK which helped Computacenter do so well. This was partly due to a one-off, £34 million software licence sale with an unnamed customer.
Even without that, UK growth was up 21 percent, with its supply chain up 52 percent and services down by seven percent.
That beats the 19 per cent growth recorded by Computacenter’s larger German arm. The outfit’s French revenues were flatter than crepes.
From a group perspective, supply chain revenues rose by 27 percent, a business Computacenter said had benefited from its customers’ drive to digitalise their business.
Services sales, which grew just two percent in Q1, are coming under savage pricing pressure; however, Computacenter added.
“We are responding to our customers’ desire to take cost out of long-term support contracts by increasing the competitiveness of our services offerings through productivity improvements which protect our profitability. However, this market trend does put corresponding pressure on our services top line growth which is currently being more than compensated by the supply chain performance.”
Softcat’s market capitalisation stands at £1.34 billion compared with £1.32 billion for Computacenter.
Softcat’s revenue run rate is close to 1 billion with its recently posted interim results showing 1H 2018 revenues powering up 25 percent to £472.8 million. Its shares have more than doubled since it listed on the LSE in November 2015.
Of course, Softcat is smaller than Computacenter in almost every respect, but it is nice to know that the market value numbers are the same.
The company’s long-standing CEO Martin Hellawell has announced that he is retiring from the role and is stepping back to the non-executive chairman role to make way for his chosen successor Graeme Watt.
The newly created position is part of Westcon’s cunning plan to increase the levels of support it can offer resellers.
Byford has worked at Computacenter, Tech Data and Zyxel and held channel development roles at Stratus and Highlight.
Reporting to Rene Klein, svp of Westcon Europe, Byford will increase the support that UK and Irish partners can expect to get from the distributor.
Klein said: “Antony brings a fresh perspective to a new chapter in the evolution of our Westcon business. He has a great record in creating opportunities for growth and development, he understands the channel landscape, and knows how to build and lead high-performing teams. His experience, drive, and talents are the ideal fit for us as we evolve our services in the coming year and leverage the opportunities our recent investments in systems present. Partners can look forward to even greater levels of support and value from Westcon.”
Byford said: “We have one of the strongest, solutions-oriented and service driven propositions in distribution that is only going to get stronger. As we create new opportunities through innovation in our services, our delivery capabilities and technology eco-systems we can all develop, grow and profit.
“Couple this with such a talented, service committed team, and we’re in great shape to forge ahead, deliver even more for more partners, and ensure Westcon remains the pinnacle of innovation and added-value in distribution.”
Overall the group saw revenue jump 27 percent to £931 million with Germany once again the standout performer.
Revenue in the German business was up 26 percent to £453 million, while France’s sales pogoed 34 percent to £127 million.
Of the UK business, Computacenter said: “Whilst the UK is growing slightly slower than the group , the results in the third quarter clearly demonstrate an improved performance.”
Computacenter announced that the momentum it experienced across the group, particularly in Germany, in the first half of the year has been maintained if not improved during the third quarter of 2017.
“Whilst the fourth quarter is our most difficult comparison to 2016 of any quarter in the year, we remain on track for a record performance. New technologies, digitalisation and our customers’ appetite to invest is as buoyant as we can remember, which is obviously driving our professional services and supply chain services.”
The company warned that its target market’s desire to reduce operating costs, and therefore the cost of running their IT, has intensified which is eroding its contractual services base, thus increasing the need to invest in productivity and innovation to remain competitive. Whatever that means.
Neil Hall, previously director of business enablement and contractual services, has taken on the UK role with Kevin James becoming chief commercial officer.
Andy Stafford has also re-joined Computacenter as chief operating officer. Stafford previously had been the company’s IT director in the late nineties.
Stafford worked at Deloitte and Virgin, before working at Accenture for a decade and then moving to Unisys.
Hall, who takes the UK managing director role, joined Computacenter in 2001 and held a number of roles before becoming group director of business enablement and contractual services in 2015.
James is now chief commercial officer. He joined Computacenter in 1990 before leaving in 1999 and re-joining in 2005. He took on the UK managing director role in 2015.
G-Cloud 7 went live this week, and according to the award notice, the number of suppliers on the scheme reached 1,615, up 11 per cent on the 1,453 which were accredited on G-Cloud 6.
For those who came in late, the UK Government G-Cloud is an initiative targeted at easing procurement by government departments for cloud systems. The G-Cloud consists of is a series of framework agreements with suppliers, from which public sector organisations can buy services without needing to run a full tender or competition.
It started in 2012 and by May 2013 there were over 700 suppliers—over 80% of which were small and medium enterprises.
As you would expect, G-Cloud 7 has the usual suspects such as SCC, Computacenter, Kelway, Memset, Agilisys, Skyscape and Liberata.
Initially there were some problems after suppliers moaned about the framework placing restrictions on how much they can scale up their services, but it looked like the expected boycott never happened.
This is probably because filling in the paperwork for a G-Cloud application takes months and once you started you might as well finish.
But the strange thing about the framework is that few will make much dosh on it unless their sales teams are entirely focused on G-Cloud business.
Leading the team will be Richard Faucher, who has previously worked at PC World, Misco, Insight, and Computacenter, and has 20+ years in the IT sector. It will be branded Academia for Business.
Academia hopes to built on its reputation as an existing Apple, Toshiba, Adobe, HP, and Microsoft supplier but to expand with mainstream server and storage to help business customers.
In a statement, Faucher said account managers will focus on different markets, including publishing and media, telecoms and technology, law and finance, and sports and leisure.
The IT services group filing for administration and there was some optimism that the Newbury-based group would be sold to either Daisy or Computacenter.
In a statement, FTI, 2e2’s administrators said they had spoken to a number of parties who were interested in acquiring all or parts of the [2e2] business as a going concern.
But FTI said that it could not get an acceptable and deliverable offer to sell the business as a going concern and there is no further funding which can be made available.
Contractors and suppliers will not get paid and 2e2’s data centre clients appear to have been asked to stump up with more dosh to keep the servers switched on. According to Contractor, a letter had been sent out to clients telling them that not paying would result in FTI being “unable to maintain [2e2’s] Data Centre Infrastructure” and the whole lot will be switched off before any customers can get their data back.
However in its letter, FTI hinted that it will be impossible for customers to get their data back in a hurry as it had been hit by a number of requests from customers seeking to gain access to their data immediately. It thinks that the levels of data stored at the company will take up to 16 weeks to get out of the system, and if customers don’t pay up to keep the servers open they will lose everything.