Insight Enterprises, a Tempe, Arizona-based information technology services provider, is looking to rapidly expand its customer base after signing a definitive agreement to acquire California-based PCM Inc.
And there's a Raleigh touch point to the deal, as the Insight maintains 65 sales positions in Raleigh, and PCM has a Triangle office.
Insight (Nasdaq: NSIT) said Monday it has offered to buy PCM, also an IT services provider, for $35 a share, which is a 36 percent premium to PCM’s closing share price of $24.38 as of June 21. Including debt and cash considerations, the acquisition has an enterprise value of $581 million.
News of the deal sent shares of El Segundo-based PCM soaring on Monday, with the shares up 43 percent, or $10.55, to $34.92 as of mid-afternoon, just below the offer price. Insight's shares on Monday were basically flat, at $55.74.
PCM (Nasdaq: PCMI) provides hardware, software and IT services to small, mid-sized and enterprise commercial clients; state, local and federal governments; and educational institutions across the U.S., Canada and the U.K.
Insight CEO Ken Lamneck said the acquisition will better position the company by adding more technical and sales resources and access to thousands of new clients, “especially in the mid-market and corporate client segments.”
Including its Raleigh office, PCM has 40 locations and more than 4,000 employees.
The PCM acquisition will accelerate Insight’s opportunity to grow in four key areas, including supply chain optimization, connected workforce, cloud and data center transformation, and digital innovation, said Steve Dodenhoff, president of Insight’s North America business.
Insight has spent the past five years transforming the company from a value-added reseller to a broad solutions provider. Insight’s previous acquisitions have expanded on that move:
- Last August, Insight bought Cardinal Solutions Group, a Cincinnati-based mobile, web, analytics and cloud solutions company, for $79 million.
- In 2016, Insight bought Datalink, an Eden Prairie, Minnesota-based data center services and solutions provider, for $258 million.
Marty Wolf, president and founder of Scottsdale-based Martinwolf Global M&A Advisors, called the PCM acquisition a good one for Insight.
Wolf said the PCM acquisition is similar to the Datalink buy, which enabled Insight to lower operating expenses and achieve cost efficiency because of significant redundancies.
“Since the [PCM] business is more horizontal and has more overlap, it should be easier for [Insight] to achieve these cost efficiencies,” Wolf said. “And for what it’s worth, Insight CEO Ken Lamneck has a Ph.D. in making complicated integrations simple.”
Insight expects the acquisition would provide annual run-rate cost synergies of $70 million by the end of 2021 primarily related to the consolidation of IT and delivery systems, and real estate and operational integration, with an additional of 70 cents per share in adjusted earnings in 2020.
This also makes Insight a “great option” for young college graduates beginning their career, he added.
“It will provide more opportunities for growth as Insight is growing, and more dynamic,” Wolf said.
The transaction is subject to customary closing conditions, including regulatory approvals and PMC shareholder approval. The deal is expected to close in the second half of the year.
In an email, an Insight spokesman declined to comment on how the news might impact Raleigh employees.