100+ trade buyers and private equity bods eyed up Kelway
CDW grabs 35% stake, valuing biz at a cool £200m
More than one hundred trade buyers and private equity firms expressed an interest in buying a piece of Kelway, before CDW finally beat the competition to take a 35 per cent stake.
As exclusively revealed by El Chan on Thursday, Kelway boss Phil Doye retains a 55 per cent stake in the firm. Others in the management team keep hold of ten per cent, and CDW has swallowed the remainder.
The deal values the business at just over £200m, and is a glowing endorsement of the UK economy and the technology supply chain.
The plan is that CDW buys the rest of the organisation in the next three years, El Chan has been told by sources.
CDW CEO and chairman Tom Richards is flying across the pond next week to meet with Kelway management and the workforce.
In the official PR burble, Richards said:
“Our investment in Kelway is natural extension of our long history of ‘following the customer’."
The pair already have an existing relationship, with Kelway supporting CDW’s international customers in the UK and mainland Europe for more than a year.
“The investment we are announcing today (Thursday) solidifies our partnership with Kelway and strengthens our ability to provide comprehensive solutions to our customers and ensure we deliver a consistent brand experience, regardless of where the solution is delivered," Richards said.
CDW also announced a 59 per cent increase in quarterly cash dividend and the authorisation of a $500m share repurchase scheme.
The company also said it plans to further “supplement organic growth with strategic tuck-in acquisitions”.
Staff at London-based Kelway were today told that 100 third parties circled the business. It came down to CDW and private equity firm Morning Star, said our moles.
Sources said Christine Leaky, CDW senior veep, general counsel and corporate secretary, and Collin Kebo, veep of planning and analysis, will join Kelway’s board.
The plan now, as expected, is to race toward the £1bn milestone (Kelway was more than half way there at the end of fiscal 2014 ending March) within three years, said CEO Phil Doye in a statement.
CDW, which turned over $11.7bn in the year to 31 September, is a Fortune 500 company founded in 1984. It has more than 7,200 staff.
Mike Norris, chief executive at Computacenter, Blighty’s largest tech reseller, was “enthused” by the morning’s news, and viewed it as a “vote of confidence for the UK market”.
Former Insight Enterprise EMEA boss Stuart Fenton, who now owns Microsoft ERP integrator QuantiQ, viewed the deal as an “astute move” by CDW to get into the European market via the UK which is “most like the US in how it operates”.
“Culturally they appear to be quite different companies and it will be fascinating to watch the [eventual] integration and assimilation of Kelway into CDW”.
The CDW buy was backed by Barclays and HSBC. Kelway were advised by William Blair — appointed in January — Reed Smith, and PWC. ®
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