CDW increases Kelway stake to 100%
US reseller CDW has increased the stake it holds in Kelway taking over the business completely
US channel giant CDW has acquired Kelway for $431m building on a minority stake the firm first took in the UK reseller towards the tail end of last year.
Back in November CDW took a 35% stake in Kelway formalising a relationship that had been gathering momentum over the year before and handing both businesses the chance to expand the support they could offer firms on both sides of the Atlantic.
In an update accompanying its second quarter results CDW confirmed that it had now acquired the remaining 65% of Kelway, which it described as a display of confidence in its strategy, for $431m in cash and stock before transaction fees and expenses and will also consolidate $80m net debt of the UK reseller.
The Q2 update revealed that Kelway served 4,500 customers across the UK and although the vast majority of those were based here there was also a growing international business that the reseller served.
“Today’s announcement is a significant one, and is the beginning of an exciting new chapter for Kelway,” said Phil Doye, CEO of Kelway. “We have focused strongly on growth in both the UK and internationally over recent years, and we look forward to continuing that growth as a part of CDW.”
Tom Richard, chairman and CEO of CDW, said that it had a strong business in North America but was increasing its activity in the UK and had a total of 250,000 customer across the US, Canada and here.
“Since our initial investment in Kelway last year, our two companies have worked closely together to support joint customers and partners – a relationship that has been very successful, thanks to our well-aligned cultures,” said Richards.
“Acquiring 100 percent of Kelway accelerates our ability to work together to meet our customers’ growing international needs and continue our path of profitable growth,” he added.
CDW was able to deliver solid figures for its Q2 with sales of $3.31bn up 6.7% on the same period a year before and net income climbing by 24.9% to $108.2m for the three months ended 30 June.
The channel player also shared an upbeat assessment of what the rest of its fiscal year had in store, highlighting the positive impact that Kelway would have to its overall performance.
"Given our outlook for operating earnings, lower interest expense and the impact of the addition of Kelway in the second half of the year, we expect to exceed our non-GAAP earnings per share target of mid-teens growth in 2015," said Ann Ziegler, CDW's CFO.