Technology distributor Ingram Micro Inc., Santa Ana, CA, has agreed to buy DBL Distributing Inc., Scottsdale, AZ, a distributor of consumer electronics accessories and related products with 2006 sales of nearly $300 million. The purchase price is $96 million.
The deal strengthens Ingram Micro’s position in a higher-margin niche of the consumer electronics market. Ingram Micro reported $31 billion in fiscal 2006 annual sales, and overall gross margin of 5.4%.
The Consumer Electronics Association estimates the consumer electronics market at $155 billion in 2007, with the accessories market at $11 billion. The industry is forecast to grow at 7% in 2007 following a 13% growth rate in 2006. An industry analyst told MDM the sub-category of consumer electronics accessories is much less price sensitive and offers stronger growth rates than core CE product areas.
Ingram Micro expanded its consumer electronics position last year when it acquired certain net assets of AVAD, a distributor of home technology integration solutions for custom installers in the U.S. AVAD was a privately held alliance of 12 companies employing 280 people throughout the U.S. AVAD reported sales of $200 million in 2004 and served 8,000 dealers through 28 multi-functional facilities that combined product showrooms, distribution centers, training locations and will-call capabilities under one roof. Its product portfolio included vendors in the high-end consumer electronics market.
Our acquisition of DBL Distributing is another step forward in Ingram Micro’s consumer electronics strategy,” said Greg Spierkel, CEO, Ingram Micro Inc. “This strategy positions Ingram Micro at the forefront of two significant trends: the continuing convergence of commercial and consumer technologies and the growing importance of retailers in the marketplace. The transaction is an example of how we plan to deploy capital in the future – through strategic acquisitions that spur growth, enhance profitability and expand our addressable market.”
DBL Distributing offers a comprehensive mix of more than 17,000 consumer electronics products to independent retailers across the U.S. The company reported 2006 sales of nearly $300 million, following four years of double-digit sales growth, with gross and operating margins double those of Ingram Micro’s core distribution business. In 2006, DBL was recognized as the 15th largest privately held and the 13th fastest growing company in Arizona.
“While our purchase of AVAD two years ago made us leaders in the custom installation market, the acquisition of DBL makes us leaders in the independent retail market,” said Keith Bradley, president, Ingram Micro North America. “This acquisition provides us with a complementary portfolio of products and services for a new and expansive customer base. We plan to leverage this opportunity by cross-selling our current selection of information technology products to DBL’s customers as well as offer our customers access to DBL’s extensive CE accessory products.”
Bradley added that DBL Distributing will operate as a wholly owned subsidiary of Ingram Micro Inc., maintaining the same brand name, business model and management structure to ease the transition for customers and vendor partners of both companies.
As part of this transaction, Ingram Micro has also purchased NXG Technology, DBL’s own private-label brand of custom audio and video installation products. The NXG brand includes two complete lines of audio/video cables, three complete lines of in-wall and indoor/outdoor speakers and a complete offering of in-wall volume controls and A/V selectors.
“DBL will benefit significantly as a wholly owned subsidiary of Ingram Micro as it gains instant visibility and access to vendors and customers worldwide,” said David Lorsch, president and CEO of DBL Distributing. “In addition, DBL can leverage Ingram Micro’s availability of capital and world class logistics resources to equip its infrastructure to continue DBL’s legacy of growth.
Investment banking firm Vetus Partners served as financial advisor to DBL for the transaction.