Tim Mueller’s Transaction Analysis: New IT M&A Deals Jan. 16

CDW To Acquire Scalar Decisions Inc.
Financial Information
  • Scalar LTM Revenue C$250M
Transaction Facts
  • Leading global IT solution provider CDW announced today it had an agreement to acquire Scalar Decisions, a major Canadian solution provider.
  • Details of the transaction were not disclosed, but according to the press release Scalar’s LTM revenue totalled C$250 million–compared with CDW’s LTM revenue of US$13.4 billion.
  • The transaction is expected to close in the first quarter of 2019 pending regulatory approval, with the companies operating separately until the deal is complete.
  • This acquisition is not expected to have a material impact on CDW’s 2019 non-GAAP earnings per share.
martinwolf Analysis
  • Doubling Down: CDW is already a major player in the Canadian market–CDW Canada appeared at the top of the CDN 2018 Top 100 Solution Provider list, its fifth consecutive time heading the list. Scalar also is a significant presence–the company was No. 8 on CDN’s most recent list and was named Storage Provider of the Year. While CDW does not specifically break out Canadian revenue, its combined Canada and UK revenue totaled $1.6 billion in its most recent annual report.
  • Bigger and Better: In statements shared with the media following the transaction announcement, CDW spotlighted the acquisition as adding both geographical coverage and technical expertise–particularly regarding managed services, cloud and security.
  • Quality, not Quantity: CDW is not a serial acquirer. The company most recently acquired Kelway, a London-based solution provider, in a two-part transaction where it first acquired 35 percent in 2014 and 65 percent in 2015 (earlier than expected). Today, CDW is the fourth-largest reseller in the UK following Computacenter, Softcat and BT.
  • Making an Impact: Longtime CDW CEO Tom Richards retired as of Jan. 1, elevating then-CRO Christine Leahy to the position. His is an accomplished history–he created more shareholder value than his closest competitors combined. When nominated to the position Chris promised “business as usual”–a focus on profitability, customer relevance and delivering value to shareholders. In the press release announcing this transaction, she emphasized Scalar’s ability to “enhance the value [CDW] can deliver to our customers.

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