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The 10 Biggest Channel Mergers And Acquisitions Of 2016 (So Far)
August, 24th 2016

With gargantuan mergers and acquisitions continuing to change the landscape of the channel, 2016 has continued last year's trend of increased channel mergers and acquisitions.

Deals like the merger of CSC and Hewlett Packard Enterprise's Enterprise Services shook up the channel. The merger of government service provider Leidos with Lockheed Martin's Information Systems & Global Solutions company will redefine the government solution provider landscape. And Chinese company Tianjin Tianhai's acquisition of Ingram Micro has accelerated the growth of the largest global distributor on the planet.

Looking back at the first half of the year, acquisitions have been made across the channel and are continuing to reshape the topography of the market.

But which were will have the most impact? CRN has put together the 10 biggest channel mergers and acquisitions so far this year.

10. Sirius Computer Solutions

Company acquired: Force 3

Head count: 170 employees

Annual revenue: $260 million

Purchase price: Not disclosed

Date of close: March 31, 2016

San Antonio-based Sirius, No. 28 on the 2016 CRN Solution Provider 500, used some of its private equity backing this March to acquire a next-generation network security-focused U.S. government solution provider, Force 3.

Sirius' purchase of the Crofton, Md-based solution provider, No. 79 on the CRN SP 500, expanded the provider's presence in the Mid-Atlantic region and allows it to tap into additional contract vehicles for public sector clients, according to Sirius.

Force 3's networking and security proficiencies will also boost Sirius' data center focus and will help the combined company deliver stronger end-to-end solutions, according to the companies.

Force 3 will continue operating as a separate legal entity and maintain the Force 3 name.

9. NTT Data

Company acquired: Perot Systems

Head count: 28,000 employees

Annual revenue: $8.4 billion

Purchase price: $3.05 billion

Date of announcement: March 28, 2016

Expected to Close: Before October 2016

Tokyo-based solution provider NTT Data bought Dell Services business Perot Systems, based in Round Rock, Texas, to expand its global footprint and increase its focus around infrastructure services, cloud services, application services and business process outsourcing (BPO), according to the company.

NTT reported that acquiring the part of Dell Services, No. 9 on the CRN SP 500 -- is going to expand NTT's BPO capabilities around health care and insurance, give it access to data centers in the U.S., U.K. and Australia, and improve its next-generation application and business process services.

Perot will continue to operate under the leadership of Suresh Vaswani, president of Dell Services, until the transaction closes.

8. Presidio

Company acquired: Netech

Head count: 430 employees

Annual sales: $300 million

Purchase price: Not disclosed

Deal closed: Feb. 2, 2016

New York-based Presidio, No. 21 on the CRN SP 500, acquired Netech in January.

Caledonia, Mich.-based Netech is one of Cisco Systems' top partners in the Midwest and, according to Presidio, has expanded the company's expertise in cloud, security and collaboration.

The purchase of Netech, No. 107 on the SP 500, has since resulted in the creation of Presidio's sixth geographic area - the Presidio North Central Area, which is now headed by former Netech Executive Vice President Mark Wierenga, as the current Presidio North Central Area President.

Netech customers are currently able to tap into Presidio's cybersecurity, cloud, Internet of Things and managed services business units, according to the company, and Netech's physical security offering will soon be expanded to Presidio customers.

7. IBM

Company acquired: Bluewolf

Head count: 500 employees

Annual revenue: $80.1 million

Purchase price: $200 million

Deal closed: May 12, 2016

IBM bought Bluewolf, a solution provider superstar that sat at the No. 240 spot on the CRN SP 500 in 2015.

The deal, according to IBM, was made to drive the market around cloud consulting services, and help the Armonk, N.Y.-based company capture a piece of the multibillion-dollar midmarket and enterprise business in the professional services industry.

For Bluewolf, working with IBM has helped propel the company's solutions to a more global scale according IBM.

As part of the acquisition, Bluewolf has been folded into IBM's Interactive Experience (iX) practice, and helped the company form a deeper consulting capability for clients adopting Salesforce solutions.

The purchase price was reported in Re/code, while Bluewolf's annual revenue is from the Inc. 5000 list.

6. Carousel Industries

Company acquired: Atrion

Head count: 300 employees

Annual revenue: $140 million

Purchase price: Not disclosed

Date of announcement: June 8, 2016

Expected to Close: Q3 of fiscal 2016

Carousel bought a fellow Rhode Island solution provider in order to quickly scale its nascent Cisco practice and become more of a one-stop shop for customers.

Exeter, R.I.-based Carousel – No. 64 on the CRN SP 500 – said nearly three-fourths of its 6,000 customers use Cisco products, but until March were unable to procure Cisco products via Carousel.

However, now, with the company's acquisition of Warwick, R.I.-based Atrion – No. 196 on the 2015 CRN SP 500 – Carousel will be able satisfy that demand.

Atrion reported that half of its revenue is from its Cisco business with a robust product and managed services practice built around the vendor.

According to the Carousel, the transaction will create a combined entity that is one of the largest and fastest-growing privately held IT services firms in the U.S, with $525 million in annual revenue and 1,300 professionals located across the nation.

5. SolarWinds

Company acquired: LogicNow

Head count: 201-500 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of deal's close: June 1, 2016

Austin, Texas-based IT infrastructure management vendor SolarWinds acquired Dundee, Scotland-based LogicNow.

According to SolarWinds, the new acquisition will provide it with the strongest and most complete portfolio of automation, security, network management and service management capabilities for MSPs.

Following the close of the deal, SolarWinds will join LogicNow together with its' SolarWinds N-Able business, a former competitor with LogicNow in the remote management and monitoring (RMM) technology market.

The new company will create an RMM behemoth with 20 offices in 11 countries serving some 20,000 MSPs.

The acquisition was backed by a group of investors led by New York-based private equity giant Insight Venture Partners.

Silver Lake and Thoma Bravo, which acquired SolarWinds in October, said at the time that they planned to increase SolarWinds's investments around cloud, hybrid and MSP environments.

4. Leidos

Merger partner: Lockheed Martin Information Systems & Global Solutions

Head count: 16,000 employees

Annual revenue: $4.7 billion

Purchase price: $5 billion

Date of announcement: Jan. 26, 2016

Expected to close: Second half of fiscal 2016

The joining of Leidos and Lockheed Martin's IS&GS business has the potential to create the world's largest pure-play U.S. government solution provider, with more than 33,000 employees and $10 billion in annual sales, outsizing the recently created CSRA, which is currently at $5.5 billion in annual revenue.

The combined company -- which is slated to retain the Leidos name -- would harness robust capabilities across the intelligence, defense and civil spaces, and would hold a stronger position in everything from network modernization to aviation modernization.

Reston, Va.-based Leidos is financing the transaction through a $1.8 billion payment to Bethesda, Md.-based Lockheed Martin and issuing $3.2 billion worth of company stock to Lockheed shareholders.

3. Blackstone

Company acquired: Mphasis

Head count: 24,000 employees

Annual revenue: $650 million

Purchase price: $825 million

Date of deal: April 4, 2016

Expected to close: Second half of fiscal 2016

Adding to the number of private-equity owned companies in the channel, which include Hebron, Ky.-based Pomeroy, Cleveland-based Park Place Technologies, Chicago-based Ahead, and New York-based Atlantix Global Systems among others, this April, the world's largest private equity fund, Blackstone Group, bought Hewlett Packard Enterprise's majority stake in Bangalore, India-based solution provider Mphasis.

According to Mphasis, the deal will open up opportunities for the company to do business within Blackstone's full portfolio -- which includes about 90 companies, including the channel's largest pure-play security solution provider, Optiv Security.

HPE, in a statement, said it will continue to do business with Mphasis and plans to renew a services contract with the Indian company for five years as part of the deal with Blackstone.

2. Tianjin Tianhai

Company acquired: Ingram Micro

Head count: 27,700 employees

Annual sales: $43 billion

Purchase price: $6 billion

Date of announcement: Feb. 17, 2016

Expected to close: Second half of 2016

The world's largest distributor, Irvine, Calif.-based Ingram Micro, will be acquired by Chinese conglomerate Tianjin Tianhai and fold the company into its logistics affiliate HNA Group of Hainan, China.

The deal will provide the distributor with a broader geographic reach and more capital for mergers and acquisitions.

Ingram Micro will retain its name, brand, headquarters and management team following the merger, with the exception of company president Paul Read, who stepped down. HNA Group does not plan to close any Ingram Micro offices, facilities or warehouses, and very few, if any, layoffs are expected as part of the transaction.

1. CSC

Merger partner: HPE Enterprise Services

Head count: 100,000 employees

Annual revenue: $18 billion

Value of merger for HPE shareholders: $8.5 billion

Date of announcement: May 24, 2016

Expected to close: March 2017

In the biggest deal this year (so far) Tysons, Va.-based CSC No. 8 on the CRN SP 500 -- sent shockwaves through the solution provider community when it revealed plans to merge with Palo Alto, Calif.-based HPE's Enterprise Services unit -- No. 3 on the CRN SP 500 -- to create an IT services behemoth with $26 billion in annual revenue.

The combined entity will be run by current CSC CEO Mike Lawrie and will have HPE CEO Meg Whitman serving on the company's board of directors. It will serve 5,000 clients across 70 countries, and is expected to generate cost savings of more than $1 billion in the first year and $1.5 billion every year thereafter.

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