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Tech Data buys Azlan

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Tech Data is to buy Azlan, Europe's biggest networking equipment distie, for $335m (approx. £142.4m) cash. This represents a premium of nearly 40 per cent more than the closing price of Azlan shares yesterday.

This morning, Azlan shares are skyrocketing, jumping 35p to, yest 125p per share - exactly the same price as Tech Data is offering.

Tech Data is the world's second biggest IT distie, after Ingram Micro, but it is number one in Europe. Azlan brings to the group much bigger market share in the key networking franchises, and a big expansion in technical training. Azlan is Europe's biggest supplier of manufacturer certification courses.

Azlan has managed to do rather better than its rivals, and has done astonishingly well considering, how torched the market is for networking equipment and technical training courses. But it cannot withstand the tide for ever. And while it may be big in Europe, it cannot command the vendor mindshare of global disties. With manufacturers constantly looking to reduce distie rosters, there is always the risk that Azlan, even Azlan, could fall off the A-list.

So selling out now looks like a very sensible option. Is it a good price? There is not exactly a seller's market for low-margin, high risk IT disties. So getting quarter times annual turnover (for the six months to September 30, 2002 Azlan produced sales of £298.6. million) and maybe 12x pre-tax annual profits (£6.2m before Bad Stuff for the same period) represents a good achievement for the Azlan board. ®

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