DCC Technology today confirmed its subsidiary, Exertis, has gobbled specialist storage and lesser known server distie Hammer for an undisclosed sum, which should help ease recent top line pressures.
Hammer trades with “almost” 1,000 reseller, system integrator and cloud service provider punters, selling infrastructure gear from vendors including Dell, Intel, NetApp, Seagate and Western Digital.
London Stock Exchange listed DCC Technology said it will use the buy to cross-sell the expanded portfolio of servers, storage, networking, security and UC kit to existing customers and the ones it is hoping to inherit.
Niall Ennis, DCC Technology managing director, claimed Hammer had carved a niche in enterprise services and “bespoke” stuff for vertical markets.
He said the buy fitted well with its relatively small existing server and enterprise lines and gave Hammer’s traders “a platform for growth with a diverse and financially strong technology distribution company”.
The deal also widens DCC’s reach into mainland Europe, beefing up sales in France and the Benelux countries and giving it a foothold in Germany and Sweden.
Hammer employs 165 staff and in the year ended 31 January 2016 it turned over £154.7m compared to £133m in the prior financial year. It reported operating profit of £6.9m versus £5.29m.
By contrast, DCC Tech’s fiscal ’16 ended 31 March was less good; revenue dropped four per cent to £2.44bn caused by slumping tab and smartphone sales. Operating profit was squeezed, falling nearly 29 per cent due to Samsung cutting out distribution to sell direct to large retailers.
The Hammer buy is subject to approval from the European Commission but completion is expected for the end of 2016.
No channel press release would be complete without the use of the word “synergy” - this is the IT industry, one that is renowned for corporate bull shit - and Hammer boss James Ward shoe-horned it into a sentence.
“We see great synergy and opportunities for our customers, vendors and employees in joining Exertis. By leveraging the complementary strengths... blah, blah, blah,” said Ward.
In truth, for both vendors, resellers, SIs and CSPs, distributor consolidation means one less source of supply, credit, and less bartering power.
But it’ll mean DCC shareholders will get to see the right kind of top line movement, while the duplication of personnel in some departments no doubts means that costs can be trimmed to improve profits. ®