The Channel

Sources: Misco sold to Hilco Capital, care home for the distressed

Failed tech reseller joins same stables as HMV, Jessops, Staples...

By Paul Kunert


Exclusive Systemax has offloaded almost all of its Misco-branded European reseller operations to Hilco Capital, a buyer of distressed firms that will add the failing tech supplier to a basket that already contains HMV and Staples, multiple sources have told The Reg.

An agreement was reached on Friday that comprises entities trading as Misco in the UK, the Netherlands, Italy, Spain and Sweden. The largest and most profitable operation in the group, in France, was excluded from the transaction, sources claimed.

One person familiar with the situation said a formal announcement of the deal is imminent. Debt restructuring is thought to be involved in the financial make-up of the deal but sources were not clear on the details.

Hilco Capital, which has completed more than 100 transactions, including buying 20th century music retailer HMV from administration in 2013, and stationery chain Staples, will have its work cut out with Misco.

Misco was once a slick, telesales-based IT reseller that was slugging it out in the low margin, high volume market tech sales sector. Senior management belatedly saw the limited shelf life in that business about five years ago and decided to shift from tin to services. That move turned out to be easier said than done and the pivot saw the firm start to come apart at the seams.

Systemax has struggled in Europe and elsewhere. The NYSE-listed company had extensive operations in North America and was busy closing retails stores, shuttering its PC production line and selling the technology reseller subsidiary NATG on to PCM at a loss. Today, Systemax in the US consists on the Industrial Products Group which sells air conditioning units, office stationery and the like.

Back in Europe, Pim Dale, the ex-Dell exec that was charged with turning Misco into a rival to services-based reseller Computacenter, found that he was unable to spin up the services business fast enough to offset declines in traditional resales markets, and left the organisation.

He was replaced by former Insight EMEA operations chief Simon Taylor, but Taylor was unable to turn around the fortunes of Misco and he left the business in December 2016, months after he’d sold the German subsidiary to CANCOM.

Misco, outside of France, has been seen by some in the industry as a busted flush. So it will be interesting to see what value Hilco Capital feels can be derived from the organisation, or how it can convince more staff not to follow colleagues out of the door. Or will it just break up the remaining parts, cut costs and strip the assets?

In 2016, the Misco businesses, excluding France, turned over $542.7m compared to $670.2m in the prior year. Operating losses, including France, were $1.9m, versus $2.6m in 2015. ®

Updated at 9.50 GMT to add: Systemax confirmed this morning that it had "executed a definitive agreement with a management team backed by Hilco Capital Limited ("Hilco") to sell all of its unprofitable European Technology Products Group businesses".

It added: "Systemax will retain its highly profitable operations in France."

CEO Larry Reinhold said: "Our France business, which was our largest operation in Europe, is highly successful and has historically operated largely autonomously from our other European operations. It is a well-managed and valuable asset with leading market share, double digit revenue growth and strong bottom-line performance. We believe that we have found a good home for our former colleagues in Europe.

"We thank them for their efforts and wish them the best of luck in their future endeavors."

The businesses were sold on a cash-free, debt-free basis. Systemax said it would provide transition services to Hilco for a "limited period of time". We are told that the business will be run by Alan Cantwell of turnaround firm MBI.

Sign up to our NewsletterGet IT in your inbox daily


More from The Register

A sorry Brexcuse! Systemax blames Brexit for car crash Q3 results

But weren't sales sliding before the EU referendum? Yes, they were

Systemax flogs German sub to CANCOM

Sound of a group break-up? Nah, just exiting 'our most challenging market'

Blink and you'll miss the turnaround at Systemax

Hang on accountants, you got the right numbers? No. So more spin than turn

Former Systemax execs ordered to repay $35m to the biz

Reseller lost $27m to fraud, will make a return when Carl and Gilbert Fiorentino cough

Former prez of Misco parent Systemax declared bankrupt

Ex-exec Pim Dale falls on hard(er) times

Systemax: Shuttering our North America Tech Group may cost $55m

Exiting leases, closing exec ops, selling inventory

Systemax bleeds cash, reports $100m net loss for 2015

Closing North America reseller biz to blame... mostly

Systemax offloads North America problem child to PCM for $14m

Assets of US and Canada tech products group sold, rest to be shuttered

Profitable business evaporates at Systemax... make that all business growth

Shuttering US retail stores blamed, but UK get hair dryer treatment from CEO too

Ex-Systemax execs Carl & Gilbert Fiorentino jailed over $27m fraud

Brothers get five and six years of stripey suntan time