Chinese Company HNA Buys Ingram Micro For $6 Billion ALL Cash

Author: John Honovich, Published on Feb 17, 2016

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 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:

** **** ** ****; *** *** ****** ***** ****** ********** * ******* *****. **** **** ******* ******** **********.

***** **** ** ************ ******* ******** *******,******* ********* *** ******* ** ** ******* ****** ******* ********** ** * **** ****** *** ******.

Cashing ***

****** ** ********* ******* *** ** **** (*** ***** ******************* ************). *** **** ** *** ******* ******* ****** **** $* billion, ** ** ****** **% **** **** ***** ****** ***** price. *** ******'* ***** *** ************ **** **** ** **** of ******* ******** ******* ******, ** *** ******* ******* ** paying **** *** ****.

*** ******* ******* ** ****** $**.** *** *****, ***** ** far****** **** ******'* ***** ***** ***** ********** *** ***.*** ******. ***** * **** ** *** *** get **.

Chinese ***** - ********

** ******* *******, ***, ***** ** ******, *****'* **** ******** province, ** *** *****. *********:

[***************]

"*** ***** *** * ***** ** **** *** *********, ***** nearly *** ******** *** ************* ******, *** ** **** *** cities, *** **** ****** **.* ******* ********** ********."

**** ** ***'* *** ******** *****, ******* *** ****** ********** HNA's ******** *** ** ******:

**** **** ** ******** ******* **** ** ** **** ** IT ***********? *** *** * **********, ******* *******, **** **** are ****** ** ********* **** ******** ** ******* *********, ** they ********:

"******* ******* *** *** ********* **** * *********** ****** ******** company **** * ****** ******** ******** ******** *** ********, ******** on ********** ** ******** ****** ********, ****** ***** ********** *** management ***** ** ******** *** ********** ** *** ******** ********, as **** ** ********* ******* *** *** ******** ********."

** ******* ****** ***** **** ****** **** ** **** ****** / ******** ************, ******* *****'* **** ****** '*********' ** **** clear ************ ******* **** ****** ***** **** *** *** *** parent *******.

*** *** ****** * ****** ** ************* ********* **** *** past *** *****, **** ******** * ********* *******:

Government ******* *****

**************** ******* ********** ******* **** ** **** ** ******* ******:

"******* *******/*** ***** **** **** *** ****** ***** *** *** funds ** **** ********** **** *********. ******* *******/*** ***** *** **** ******* ************* **** * number ********* ***** *** ********* ************."

***, *******, ***** *** *** ** *** **********. ** ******, ***** *** ******* ** ** *******, ** too *** *********** ********** *********.

Bubble ****

********* *** ************** ** **** ******* ********* **** ****** ** powerful **** **** *** ***** ** *** ***** ***** ** takeover *** *****. ** ***** ****.

*** ************ ******* *******, *** ***** **** ** ***** ***** market, ********* ******** ** ******* ****** **** *****, ***** ** *** ***********, *** ******* **********'******** ******* ****** / ****, *** * **** ********* ***********.

"Weird ******* *****"

****** **** ************* ***** *** ****** ****** ******'* ***** *******, one ******* **** **** **** ** ********** **** ** *** deal: "***’* $* *** ****** *** *** ***** ******* *****." **** ** **** *** ******:

  • "** ****** * ***** ******* * ********* ****." ** ******* currency ***** ******* ******* *** ** ******* (***** **** **** but *** *** ****** **** *** ******), *** ** ******* that ****** ***** ********* ***** ** ***** **** ** ***.
  • "************ **** **** *** ******* ******* ** *** ******’* ******** is ******* ******." ** *** ***** ****, ** ** *** as ** ****** ***** *** **** ********** ******* ****** ******.
  • "*** **** ** ***** ********* *******. ** *** ******-***** ***** can ****** *** ** *** ******** ******* *** *****’* ***** into ******** ******* ** **** ***** ****** **** ******* ***********, which ** **** **** **** ** ****** ** **** ***** credit." ******, *** ******* ********** ** **** **** ** ***** of ******** **** ***** *** ******** ***** ** *** ******* by ****** ***** **********. ******* ****** ***** ****, ******* ** be ****.

Too **** ** **** **

***** *** ****'* **** ** ***** *********, *** *** ****** do **? ****** *** ***** ****** *** ******:

"*** ***** ********** **** *** ***** ******* ** ****** ***** shareholders ******** ****-****, ************ ***** ** *** ************ ** * substantial *******"

** ***** *****, *** ***** ******* *** *** **** ** pass **.

*** ***, ****** * ******, *** ******, ********** *** ****** business **** ****** ** * ******* ******* ** *** ***** business.

*** **** **** ****** ****? *** **** ** * **** win *** ****.

Comments (26)

Joe Summanen

02/18/16 01:44am

Tonight's Powerball winner is...

John Honovich

IPVM | In reply to Joe Summanen | 02/18/16 01:46am

Joe, lol...

Anyone who wants to sell out now should start reaching out to Chinese companies!

Undisclosed #1

02/18/16 01:46am

This 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!

John Honovich

IPVM | In reply to Undisclosed #1 | 02/18/16 05:21pm

"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.

Undisclosed #1

In reply to John Honovich | 02/18/16 05:31pm

...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

Undisclosed #2

02/18/16 02:03am

have ?
What will happen if Chinese company want to buy IPVM
John?

John Honovich

IPVM | In reply to Undisclosed #2 | 02/18/16 02:08am

No, I am quite happy with what we do and what we make at IPVM. Not interested.

Undisclosed #1

In reply to John Honovich | 02/18/16 02:21am

Even if they promised to put in an authentic Chinese Wall? ;)

Steve Mitchell

In reply to John Honovich | 02/18/16 06:08pm

That's exactly what Dave McDonald said.

Undisclosed Manufacturer #3

02/18/16 02:07am

Arecont?

John Honovich

IPVM | In reply to Undisclosed Manufacturer #3 | 02/18/16 02:10am

Arecont 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.

Undisclosed #1

In reply to John Honovich | 02/18/16 02:25am
Woo to anyone wild enough to buy Arecont.
Woah to anyone wild enough to buy Arecont.

Woe works as well...;)

Undisclosed Manufacturer #4

02/18/16 02:15am
Strange days as China Inc flexes its muscles

Undisclosed Distributor #5

02/18/16 02:53pm

Ingram 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.

John Honovich

IPVM | In reply to Undisclosed Distributor #5 | 02/18/16 02:59pm

Actually, 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!

Patrick Heenan

IPVMU Certified | 02/18/16 03:11pm

China 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.

John Honovich

IPVM | In reply to Patrick Heenan | 02/18/16 05:12pm

Patrick,

#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.

Undisclosed Manufacturer #6

In reply to Patrick Heenan | 02/19/16 05:47am

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.

+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.

Undisclosed #1

02/18/16 05:05pm

$$ Cha-Ching-ram $$

Undisclosed Integrator #7

02/19/16 08:36pm

When 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?

Andrew Thomas

02/21/16 11:16pm

Our business with "D and H", US based, and employee owned is guaranteed to grow.

Undisclosed Integrator #8

03/29/16 05:19pm

Why 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

Undisclosed #1

In reply to Undisclosed Integrator #8 | 03/29/16 05:31pm

It's the Communist Party Flag of China.

John Honovich

IPVM | 04/11/16 10:33am

Another HNA acquisition, HNA "has agreed to buy Swiss airline catering firm Gategroup Holdings for $1.5 billion in cash"

John Honovich

IPVM | 09/07/18 12:40pm

Update: 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.

Undisclosed Manufacturer #9

In reply to John Honovich | 09/07/18 01:39pm

Billion is what you meant, although if it sells for less than 6 million I might try to buy it. LOL Now it says billion.

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