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ScanSource Announces Agreement to Acquire Brazil’s Leading Communications Distributor, Network1
|By Business Wire
|August 15, 2014 09:02 AM EDT
ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added
distributor of specialty technology products, will expand its
communications business in Latin America through its planned acquisition
of Network1, Intersmart Comércio Importação Exportação de Equipamentos
Eletrônicos, S.A. (“Network1”). Network1 is Brazil’s leading value-added
distributor of communications equipment and services. As part of the
transaction, ScanSource will be acquiring all of Network1’s operations
throughout Latin America, including Brazil, Mexico, Colombia, Chile and
Network1 net sales for calendar year 2014 are estimated at approximately
R$850 million (approximately US$374 million) with operating margins
consistent with ScanSource’s Communications business. Network1 has
demonstrated double-digit sales growth, which is projected to continue
during the four-year earnout period. The acquisition is expected to be
accretive to earnings per share and return on invested capital (ROIC) in
the first year after closing, excluding one-time acquisition costs.
Founded in 2004 and headquartered in Sao Paulo, Brazil, Network1 has
nearly 400 employees throughout Latin America. ScanSource is committed
to becoming the leading value-added distributor of communications
solutions for resellers in Latin America, and this acquisition
represents an important step in this strategy. Network1 offers a broad
portfolio of communications solutions, including unified communications
and collaboration, networking and performance, data center and
virtualization, cloud, logical security, infrastructure and physical
security. The company carries a strong line of more than 65 vendor
partners, including Avaya, Checkpoint, Dell, Extreme, F5, HP, Juniper,
Polycom, Microsoft, Riverbed and Schneider-Electric.
“We entered the Brazilian Barcode and POS market in 2011 with the very
successful acquisition of CDC Brasil, the region’s largest Barcode and
POS value-added distributor,” said Mike Baur, CEO, ScanSource, Inc. “We
have been looking for the right opportunity to complement and expand our
successful Brazilian growth business with the addition of communications
products in that geography. With Network1, we have found the right
partner to cultivate and grow our value-added distribution business in
Latin America. Rafael Paloni, Network1’s Chief Executive Officer, is a
skilled leader who can help us leverage our existing operations in the
area into new growth, not just in Brazil, but throughout the region.”
Following the closing of the transaction, Mr. Paloni will lead
ScanSource’s Communications business in Latin America.
“Joining forces with ScanSource is the right move for Network1, our
vendors and our resellers,” said Mr. Paloni. “ScanSource has a tradition
of excellence in value-added distribution, and I am thrilled to be able
to add to their success in Brazil and throughout Latin America.”
The all-cash transaction includes an initial purchase price of
approximately R$160 million (approximately US$70 million), plus earnout
payments based on EBITDA over the next four years. The acquisition is
subject to the completion of due diligence and regulatory approvals and
is expected to close by the end of 2014. In the interim, business will
continue as usual for both ScanSource and Network1 pending such
ScanSource management will discuss the planned acquisition on its
earnings conference call, scheduled for Thursday, August 21, 2014, at
5:00 p.m. ET. The call may be accessed via a live Internet webcast in
the Investor Relations section of ScanSource, Inc.’s web site, www.scansource.com.
Safe Harbor Statement
This press release contains comments that are “forward looking”
statements that involve risks and uncertainties; these statements are
subject to the safe harbor created by the Private Securities Litigation
Reform Act of 1995. Any number of important factors could cause actual
results to differ materially from anticipated results, including, but
not limited to, the failure for the acquisition of Network1 to be
accretive to earnings per share and ROIC in year one, the continued
ability for Network1 to demonstrate sales growth, the potential for the
acquisition to not close by the end of 2014, or at all, due to a variety
of factors, including due diligence review and regulatory approvals. For
more information concerning other factors that could cause actual
results to differ from anticipated results, see the Company’s annual
report on Form 10-K for the year ended June 30, 2013, and its subsequent
quarterly reports on Form 10-Q filed with the Securities and Exchange
Commission. You are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this
press release. We undertake no obligation to make any revisions to the
forward-looking statements or to reflect events or circumstances after
the date of this press release.
Network1 has offices in Brazil and throughout Latin America. For more
information on Intersmart Comércio Importação Exportação de Equipamentos
Eletrônicos, S.A. please visit http://www.intersmart.com.br.
About ScanSource, Inc.
ScanSource, Inc. (NASDAQ:SCSC) is the leading international distributor
of specialty technology products, focusing on point-of-sale (POS) and
barcode, communications and physical security solutions. ScanSource’s
teams provide value-added services and operate from two technology
segments, Worldwide Barcode & Security and Worldwide Communications &
Services. ScanSource is committed to helping its reseller customers
choose, configure, and deliver the industry’s best products across
almost every vertical market in North America, Latin America and Europe.
Founded in 1992, the Company ranks #751 on the Fortune 1000. For more
information, visit www.scansource.com.
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