WSJ Investigates HNA, Chinese Owner Of Ingram Micro

JH
John Honovich
Nov 20, 2017
IPVM

Another lengthy report from WSJ, last week about Hikvision, now about HNA.

Last year, HNA paid $6 billion all-cash for Ingram Micro.

Some key quotes from the WSJ report on HNA, who started as a regional China airline:

  • "Between early 2015 and October, HNA had announced over 80 deals totaling more than $40 billion."
  • "Now they have heavy debt and are sparking fears they could pose a systemic risk to China’s economy—as well as uncertainty over the future of cross-border investment."
  • "Uncertainty surrounding HNA is compounded by the opacity of its ownership and corporate structure—a web of subsidiaries that makes it hard to figure out who controls what and who is ultimately liable if difficulties arise."
  • "Earlier this month, a unit of the company had to pay 8.875% in interest to borrow $300 million for less than a year, compared with similar bonds issued by a junk-rated Chinese property developer at 5.5%."

HNA is, in American terms, if Southwest Airlines bought IT distributors, investment firms, hotel chains, etc. See HNA's list of acquisitions.

It will be interesting to see what impact this has on Ingram when HNA unwinds/collapses. On the other hand, Ingram has been bad enough already in physical security.

JH
John Honovich
Nov 30, 2017
IPVM

HNA now looking to sell off assets it bought in the last few years, problem:

A big hurdle for the company is that many of its overseas assets were purchased at relatively high valuations, which may make it difficult for HNA to recoup its money at a profit, say people familiar with the company.

What a crazy company...

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JH
John Honovich
Jan 18, 2018
IPVM

HNA is now trying to borrow money from its own employees to stay afloat, WSJ new report:

Chinese conglomerate HNA Group, which needs to pay off billions of dollars in debt this year, has come up with another way to raise money from its employees.

HNA recently pitched its employees a new investment product that promises a minimum annualized return of 9.5% and that could potentially yield as much as 39%, according to documents reviewed by the Wall Street Journal.

No word on whether Ingram Micro employees can get in on this great deal risky endeavor.

MD
Matthew Davis
Jan 18, 2018

I use to do business with Ingram but over the past few years their pricing got out of hand and you could just about buy most of the stuff they sell cheaper on Amazon and other web stores. When I lost my outside salesman from them I knew they were headed downhill. I feel the buyout was just a "take the money and run" scenario.

JH
John Honovich
Jan 18, 2018
IPVM

I feel the buyout was just a "take the money and run" scenario.

In fairness, was not 'just' a take the money and run scenario. It was one of the most brilliant such runs. It is hard to imagine Ingram execs not understanding the dangers of HNA taking over Ingram (e.g., we called that out when the acquisition occurred) but since Ingram execs negotiated all cash payment, they took the money...

JH
John Honovich
Jan 20, 2018
IPVM

Now, the US government is blocking HNA from further acquisitions, says Reuters:

The U.S. government will not approve any investment by HNA Group HNAIRC.UL until the Chinese conglomerate, which has been scrutinized around the world over its ownership structure, provides adequate information on who its shareholders are, a source familiar with the situation said.

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