Channel in disarray after Westcondrops Landis deal

After Westcon's shock decision to walk away from its plan to acquire Landis' European distribution business, the channel is...

After Westcon's shock decision to walk away from its plan to acquire Landis' European distribution business, the channel is carefully weighing up the options and working out what the next move is likely to be.

From the two companies themselves, which have had to rip up plans for their European strategies, to competitors operating in the same space and vendors looking at their distribution spread, every layer of the channel will be hit in some way by this decision.

Although it has remained tight-lipped so far on a European level, Landis - which is likely to emerge from the situation worse off than Westcon - claimed to have resumed talks with other interested parties.

But the question everyone seems to be asking is who those interested parties could possibly be.Ingram Micro European president Greg Spierkel claimed the Landis distribution business would require a lot of investment to turn it around and said his company would look at it, but added: "We look at everything that comes up - like we looked at Metrologie - it doesn't mean we'll buy it."

Other possible buyers include Tech Data, although one industry source told MicroScope he could not see how it would fit in with the group's European operation or specialised networking unit given that it lacked the crucial Cisco franchise.

The wrong price
From Westcon's point of view, CEO Alan Marc Smith said it had walked away from the deal because of a disagreement over price.

He did not believe the move would reflect badly on the company because a lack of cash or inability to match Landis' asking price were not the issue.

"We had released the majority of the cash and were in a position to close the transaction. The biggest concern among the analysts was that we were willing to buy at any cost. We're pleased we didn't risk our future on it," he added.

Marc Smith agreed there was "no other pan-European distributor out there" that would fit into Westcon's operation, but insisted a piecemeal strategy could work just as well.

"Our strategy before Landis came up was on a country-by-country basis. There are greenfield opportunities out there and we'll acquire the best companies wherever they may be."

He was also careful not to rule out taking another look at Landis in six months' time if the business was still on the market.

A better offer?
Towing the European line, Mike Watkins, UK managing director of Landis, claimed he was confident the group would achieve its aim and find another buyer.

"It could turn out that we end up with a better partner. Westcon had more implications for us than others as it already had a UK operation," he said.

On the vendor side, companies such as 3Com will be thinking hard about how the development affects their European distribution strategies.

3Com UK country manager Paul Malcolm had previously admitted the group's distributor consolidation drive would be put on hold because of the Landis/Westcon merger.

Following the news that the deal had been called off, Malcolm revealed he was still mulling over the new situation at Landis and it was too early to pass judgement.

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