China's Tianjin Tianhai to buy Ingram Micro for $6bn

Ingram Micro is set to become part of aviation and shipping conglomerate HNA Group. That is, if CFIUS keeps its grubby paws away from the deal

Distributor Ingram Micro is to be acquired by Chinese investment group Tianjin Tianhai for roughly $6bn.

Should the deal close, the world’s largest distie will become part of HNA Group, a Hainan-based conglomerate specialising in aviation, tourism and logistics. Ingram Micro will continue to be headquartered in Irvine, California.

The offer of $38.90 per share represents a 31.2% premium on Ingram's current share price.

"Our agreement to join HNA Group delivers near-term and compelling cash value to our stockholders and we expect it to provide exciting new opportunities for our vendors, customers and associates,” said Alain Monié, Ingram Micro CEO.

“As a part of HNA Group, we will have the ability to accelerate strategic investment, as we continue to capitalize on the constant evolution of technology and emerging trends by adding expertise, capabilities and geographic reach. Additionally, Ingram Micro will now be part of a larger organization that has complementary logistics capabilities and a strong presence in China that can further support the growth and profitability objectives of our vendor and customer partners."

In recent months, Chinese companies have been on the hunt for foreign acquisitions, in order to offset the effects of a stalling domestic economy.

While both parties will be keen to get the deal pushed through, there are various political hurdles to overcome first. Several such deals have fizzled out due to national security concerns. The US Committee on Foreign Investment in the United States (CFIUS), an inter-agency committee that reviews the national security implications of foreign investments, has the power to derail negotiations.

This may be a new area for CFIUS, given that Ingram is a distributor of technology products and solutions, rather than a vendor.

CFIUS reviews generally begin with a 30-day window to authorise a transaction or begin a statutory investigation. Should the committee pursue an investigation, it has another 45 days to decide whether to grant the acquisition or order divestment.

According to CIFUS’ most recent Report to Congress, of the 97 transactions reported to CFIUS in 2013, 48 were investigated further.

In an 8-K filing, made with the US Securities and Exchange Commission (SEC), Ingram stipulated that should antitrust approvals not be obtained, or CFIUS not have closed its investigation by the merger agreement date, Tianjin Tianhai will be required to pay the company a reverse termination fee of $400m.

Given the hefty termination fee, it would seem both parties of confident of approval.

“We look forward to supporting Ingram Micro's management team and strategies, including continued expansion into new geographies, while also offering their vendor and customer partners access to new and complementary offerings,” said Adam Tan, vice chairman of the board of directors and CEO of HNA Group. “We share Ingram Micro's commitment to integrity, innovation and performance and we are confident this transaction will enable Ingram Micro to continue to distinguish itself in the marketplace and meet the needs of its vendor and customer partners better than ever before.

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