28 October 2016
Ingram Micro distributes products ranging from Apple's iPhones to Cisco's network equipment. Photo: Bloomberg
Ingram Micro distributes products ranging from Apple's iPhones to Cisco's network equipment. Photo: Bloomberg

HNA Group to buy Ingram Micro for US$6 billion

Chinese aviation and shipping conglomerate HNA Group is buying electronics distributor Ingram Micro Inc for about US$6 billion.

The offer of US$38.90 per share from HNA unit Tianjin Tianhai Investment Co Ltd (600751.CN) represents a 31.2 percent premium to Ingram’s closing price on Wednesday, Reuters reported.

Ingram Micro distributes products ranging from Apple Inc.’s iPhones to Cisco’s network equipment.

Chinese companies have been aggressively splurging on foreign acquisitions to sidestep slowing domestic growth.

The total value of Chinese outbound acquisitions topped US$1 trillion for the first time last year.

But some Chinese deals have hit a roadblock in the United States after the US Committee on Foreign Investment in the United States (CFIUS) raised concerns over national security.

Fairchild Semiconductor said on Tuesday it had rejected an offer from China Resources Microelectronics Ltd. and Hua Capital Management Co. Ltd., citing concerns over the US approval process.

Ingram said in a regulatory filing that Tianjin Tianhai will be required to pay the company a fee of US$400 million if the deal is terminated following a CFIUS investigation.

“I don’t expect it would be a security concern as Ingram Micro is a distributor of the equipment, and the vast majority of the products do not go to high-security customers,” Northcoast Research analyst Keith Housum said.

The deal will help HNA Group, the owner of China’s Hainan Airlines (600221.CN) and the largest stockholder in Tianjin Tianhai, bolster its logistics arm with Ingram’s supply chain network.

It will also give the company a stronger foothold in high-growth emerging markets through Ingram’s large international presence.

As part of the deal, Ingram Micro will suspend its quarterly dividend payment and its share repurchase program, it said.

Morgan Stanley was financial adviser to Ingram Micro, while China International Capital Corp. Ltd. and Bravia Capital were lead financial advisers for HNA Group.

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