Tech Pac Takeover: Who Benefits?

Without doubt, the acquisition of Tech Pacific by Ingram Micro is big news.
But only in some pockets of the Asia Pacific region. Not just that, this merger
does not seem to benefit anybody, least of all channel partners.

First and foremost, let us understand why it is big news in some places and
no news in other places. One fact that we need to keep in mind, is that Tech Pac
is a very small entity as far as the international IT distribution business is
concerned. It operates only in the APac region and that too in less than 10
countries. And China-the biggest IT market in this region-does not figure in
its distributing countries list.

Even amongst the handful of countries where Tech Pac operates, it is a strong
number one only in Australia and leads the pack by a small margin in India.

In some other countries like Malaysia, Singapore and Thailand, it is small
news as Tech Pac is not a very strong player in these countries. In the US and
Europe it is no news, simply because the company does not exist in those places.

For Tech Pac, it is hard to visualize any direct benefit except that the
shareholders will get good rewards. For Ingram Micro, two benefits can be
visualized. Firstly, its revenue from the APac region will now double. This is
as per the company's claim, however, no hard data has been provided to
corroborate this contention.

Secondly, Ingram will become the number one distributor in Australia and
India. In the case of India, the company has been recording strong growth for
the last couple of years and it was a matter of at best two more years before it
would have become the number one in any case. So, very little benefit from
India.

As per Ingram, "the channel will stand to gain by the depth of market
knowledge and technical expertise that the merged entity will provide". Is
the community really hungry and waiting for this "knowledge" and
"expertise"? Absolutely not.

The acquisition will certainly not bring any benefit for the channel. Rather,
it will unsettle the market because some kind of a monopolistic situation will
get created. Which will result in bringing down their bargaining power with the
distributors, as now the number gets reduced from three to two-including
Redington. Yes, there are a number of other distributors in the game, but they
are too small in comparison to really matter.

So, who benefits from this deal? Nobody-least of all the channel partners.
It is time the channel realizes this fact and starts getting its act together to
make sure that their upper hand does not become the lower hand.

Asim Raina