Tonight's Powerball winner is...
Chinese Company HNA Buys Ingram Micro For $6 Billion ALL Cash
Published Feb 17, 2016 05:00 AM
We take it back; All the things about Ingram Micro being a bunch of fools. They have totally redeemed themselves.
Faced with an increasingly damaged domestic economy, Chinese companies are loading up on debt and buying Western businesses in a wild gambit for growth.
Cashing Out
Ingram is literally cashing out on this (see their announcement and deal presentation). Not only is the Chinese company paying them $6 billion, it is nearly 40% more than their recent stock price. And Ingram's board and shareholders will have no risk of holding volatile Chinese shares, as the Chinese company is paying them all cash.
The Chinese company is paying $38.90 per share, which is far higher than Ingram's stock price since 1999 [link no longer available] during the dot.com bubble. Quite a deal if you can get it.
Chinese Buyer - Aviation
An airline company, HNA, based in Hainan, China's most southern province, is the buyer. HNA boasts [link no longer available]:
"*** ***** *** * ***** ** over *** *********, ***** ****** *** domestic *** ************* ******, *** ** over *** ******, *** **** ****** 77.4 ******* ********** ********."
**** ** ***'* *** ******** *****, showing *** ****** ********** ***'* ******** has ** ******:
**** **** ** ******** ******* **** to ** **** ** ** ***********? HNA *** * **********, ******* *******, that **** *** ****** ** ********* from ******** ** ******* *********, ** they ********:
"******* ******* *** *** ********* **** a *********** ****** ******** ******* **** a ****** ******** ******** ******** *** operator, ******** ** ********** ** ******** market ********, ****** ***** ********** *** management ***** ** ******** *** ********** of *** ******** ********, ** **** as ********* ******* *** *** ******** industry."
** ******* ****** ***** **** ****** part ** **** ****** / ******** organization, ******* *****'* **** ****** '*********' or **** ***** ************ ******* **** Ingram ***** **** *** *** *** parent *******.
*** *** ****** * ****** ** international ********* **** *** **** *** years, **** ******** * ********* *******:
Government ******* *****
**************** ******* ********** ******* **** ** used ** ******* ******:
"******* *******/*** ***** **** **** *** merger ***** *** *** ***** ** well ********** **** *********. ******* *******/*** ***** *** **** working ************* **** * ****** ********* ***** *** ********* ************."
***, *******, ***** *** *** ** *** government. ** ******, ***** *** ******* is ** *******, ** *** *** substantial ********** *********.
Bubble ****
********* *** ************** ** **** ******* companies **** ****** ** ******** **** they *** ***** ** *** ***** money ** ******** *** *****. ** doubt ****.
*** ************ ******* *******, *** ***** fall ** ***** ***** ******, ********* ******** ** ******* ****** **** China, ***** ** *** ***********, *** Chinese **********'******** ******* ****** / ****, *** * **** ********* ***********.
"Weird ******* *****"
****** **** ************* ***** *** ****** copied ******'* ***** *******, *** ******* blog **** **** ** ********** **** on *** ****: "***’* $* *** ****** *** *** weird ******* *****." **** ** **** *** ******:
- "** ****** * ***** ******* * devaluing ****." ** ******* ******** ***** further ******* *** ** ******* (***** many **** *** *** *** ****** will *** ******), *** ** ******* that ****** ***** ********* ***** ** worth **** ** ***.
- "************ **** **** *** ******* ******* in *** ******’* ******** ** ******* driver." ** *** ***** ****, ** is *** ** ** ****** ***** has **** ********** ******* ****** ******.
- "*** **** ** ***** ********* *******. If *** ******-***** ***** *** ****** one ** *** ******** ******* *** China’s ***** **** ******** ******* ** will ***** ****** **** ******* ***********, which ** **** **** **** ** access ** **** ***** ******." ******, the ******* ********** ** **** **** in ***** ** ******** **** ***** and ******** ***** ** *** ******* by ****** ***** **********. ******* ****** helps ****, ******* ** ** ****.
Too **** ** **** **
***** *** ****'* **** ** ***** synergies, *** *** ****** ** **? Ingram *** ***** ****** *** ******:
"*** ***** ********** **** *** ***** offered ** ****** ***** ************ ******** near-term, ************ ***** ** *** ************ at * *********** *******"
** ***** *****, *** ***** ******* was *** **** ** **** **.
*** ***, ****** * ******, *** growth, ********** *** ****** ******** **** Ingram ** * ******* ******* ** not ***** ********.
*** **** **** ****** ****? *** cash ** * **** *** *** them.
Comments (27)
JS
Joe Summanen
Feb 18, 2016JH
John Honovich
Feb 18, 2016Joe, lol...
Anyone who wants to sell out now should start reaching out to Chinese companies!
U
Undisclosed #1
Feb 18, 2016This is the single greatest piece of news I have ever read on IPVM!
And I was this close to dumping this dog for a 2015 loss!
Thank you, again!
JH
John Honovich
Feb 18, 2016"And I was this close to dumping this dog for a 2015 loss!"
Don't take this as stock trading advice but...
The agreed acquisition price is $38.90. The stock today, after yesterday's announcement, jumped but is still ~$36. My read is that the $3 gap is from investors having some concern that the deal will go through. Of course, there are risks given Ingram's size and the China / US politics involved.
So if you do own Ingram, you might be prudent to count your gains today rather than risk for the last $3 per share.
U
Undisclosed #1
Feb 18, 2016...concern that the deal will go through. Of course, there are risks given Ingram's size and the China / US politics involved.
Agreed. Fingers crossed.
Related: Light bulbs > Security Cameras
U
Undisclosed #2
Feb 18, 2016have ?
What will happen if Chinese company want to buy IPVM
John?
JH
John Honovich
Feb 18, 2016No, I am quite happy with what we do and what we make at IPVM. Not interested.
UI
Undisclosed Integrator #3
Feb 18, 2016Arecont?
JH
John Honovich
Feb 18, 2016Arecont would sell to anyone who would meet Kaplinsky's unrealistic expectations but I am not sure what the Chinese would want with a camera manufacturer with a horrible brand.
Woah to anyone wild enough to buy Arecont.
U
Undisclosed #1
Feb 18, 2016Woo to anyone wild enough to buy Arecont.
Woah to anyone wild enough to buy Arecont.
Woe works as well...;)
UM
Undisclosed Manufacturer #4
Feb 18, 2016Strange days as China Inc flexes its muscles
SS
Stephen Schulz
Feb 18, 2016Whoa, sounds like China is trying to get all they can before Trump kicks their ass.
UD
Undisclosed Distributor #5
Feb 18, 2016Ingram is a $30B supply chain company with a big international footprint. HNA 2015 revenues were $29B. I don't think the type of products that Ingram sells is important to HNA. It's probably the scalable logistics and technology. Maybe it makes more sense than it appears on the surface. Will be interesting to see what they acquire next.
JH
John Honovich
Feb 18, 2016Actually, Ingram does ~$45 billion in annual revenue. One thing it will do for HNA is wonders for their Fortune 500 ranking, which they care greatly about.
I'd still love to hear how any aviation company is going to make a return by paying a 40% premium on an IT distributor. Anyone with theories, please share!
PH
Patrick Heenan
Feb 18, 2016China is releasing the balance of trade dollars they are holding to the only safe place for them --USA.
Two things occur to me:
1. the greater the investment in hard assets in the US, the harder it is to be confrontational in the world. Competitive yes, confrontational no.
2. I wonder how the US government views this acquisition with regard to the BAA & TAA purchasing rules for buying American. Will they remove Ingram Micro from their approved supplier list? What about Defense Contractors Boeing, Northrup, GE, Dell, HP etc.
JH
John Honovich
Feb 18, 2016Patrick,
#2 is a good question. I assume Ingram will argue that since they do not actually develop any of the products they sell, but simply move them around that it should not impact them.
But I do not know. Just last month the US government blocked the Philips lighting component to China deal, so perhaps they will find a reason or concern to either block or restrict Ingram.
UM
Undisclosed Manufacturer #6
Feb 19, 20161. the greater the investment in hard assets in the US, the harder it is to be confrontational in the world. Competitive yes, confrontational no.
+1
6B USD looks to be a lot of memory for any individual investor, but not for China banks. The lesson they will learn by this acquisition of Ingram Micro can be more useful than buying a MOTO cellphone company.
As China economy is bigger and more international than before, logistics is becoming more strategically important. Recently, two China big shipping companies have been approved to merge into a super big one.
The merged revenue is more than 40B.
So the airline company may want to convert herself into a more generic logistic/shipping company, and be more international. This can be good or bad, depending on your standpoint.
U
Undisclosed #1
Feb 18, 2016$$ Cha-Ching-ram $$
UI
Undisclosed Integrator #7
Feb 19, 2016When I think about it, its a bit disconcerting to think the products we purchase come from/are owned by the Chinese particularly with how invasive the products can be. For instance, Vizio TV's... anyone else feeling odd about it?
AT
Andrew Thomas
Feb 21, 2016Our business with "D and H", US based, and employee owned is guaranteed to grow.
UI
Undisclosed Integrator #8
Mar 29, 2016Why is there the Soviet Union flag with hammer and sickle on it, when the article is dealing with Chinese companies?
https://en.wikipedia.org/wiki/Flag_of_the_Soviet_Union
The flag of the PRC has only stars on it, no hammer and sickle: https://en.wikipedia.org/wiki/Flag_of_China
U
Undisclosed #1
Mar 29, 2016JH
John Honovich
Apr 11, 2016Another HNA acquisition, HNA "has agreed to buy Swiss airline catering firm Gategroup Holdings for $1.5 billion in cash"
JH
John Honovich
Sep 07, 2018Update: WSJ is reporting today that HNA is in talks to sell off Ingram Micro, just 2 and a half years later: WSJ - HNA, Under Pressure From Beijing, to Sell Its Overseas Empire
HNA has been a disaster over the last few years, with mounting losses, huge debt, their Chairman dying while taking a photograph in France, etc...
Could be a good move for Ingram and someone will get to buy them a steep discount to the $6 billion cash HNA paid.
UM
Undisclosed Manufacturer #9
Sep 07, 2018Billion is what you meant, although if it sells for less than 6 million I might try to buy it. LOL Now it says billion.
JH
John Honovich
Dec 09, 2020Sold. Nearly 5 years later, HNA has sold Ingram Micro for ~$7.2 billion. On the plus side, that is ~1 billion dollars more than they bought it for, ~16% up. That's not a huge return for that time period but it's better than most of what HNA is now.