Ingram Micro Will Become Separate Firm : Management: O.C. computer products distributor will offer shares to the public after its parent company breaks up.
Setting the stage for what promises to be a substantial stock offering early next year, computer products distribution giant Ingram Micro Inc. said Wednesday that it will become a separate, publicly traded corporation as part of a planned breakup of its parent company.
Ingram Micro, the world’s largest distributor of personal computer products, is one of three entities that will be formed by the splintering of Ingram Industries, a sprawling, Nashville, Tenn.-based company that owns businesses ranging from book wholesaling to river barge shipping.
Following that breakup, set to take place Jan. 1, Ingram Micro will sell stock to the public “sometime after April, 1996,” the company said.
But Linwood A. (Chip) Lacy Jr., chairman and chief executive of Ingram Micro, cautioned that the newly issued shares will represent less than 25% of the company, and that the Ingram family will retain a majority ownership stake.
Ingram Micro, which employs 6,000 people and expects sales of $8.5 billion this year, will continue to be based in Santa Ana, said Lacy, who has served as chief executive of the company almost continuously since 1985.
“Nothing is going to change,” Lacy said. “This is about some reshuffling of ownership among the [Ingram] family.”
For the past few months, Lacy has served as chief executive of both Ingram Micro and the parent company, but he said the latter position will no longer exist after the restructuring takes effect.
Analysts said the stock offering will enable Ingram Micro to raise perhaps as much as $250 million in cash, but that the thriving company hardly needs it.
“I don’t believe there is going to be a huge impact simply because Ingram Micro has had adequate financing in the past, and has been growing pretty aggressively anyway,” said Genni Combes, an analyst at Hambrecht & Quist in San Francisco. “It’s just going to be more of the same.”
The other two companies to be created by the split will remain privately held and continue to be managed by the Ingram family. The split was prompted by the death in June of E. Bronson Ingram, the founder and longtime chairman of Ingram Industries.
Ingram’s widow, Martha R. Ingram, said in a prepared statement Wednesday that the parent company is being divided as part of a longstanding plan to give her three sons a chance to run pieces of the empire assembled by their father.
“This reorganization fulfills Bronson’s desire for his three sons to have an opportunity to run businesses and to place their own marks on those businesses,” Martha Ingram said.
Two of the sons will hold top management positions in a new, pared-down version of Ingram Industries, which will continue to own the barge shipping company, the book group and other interests. The third son will run Ingram Entertainment, a wholesaler of video cassettes.
Lacy said that even though Ingram Micro plans to sell stock to the public, the other two new companies will remain privately held, partly because the Ingram family members wanted to retain a tight hold on the businesses they will manage.
In addition to providing a new source of capital for expansion, the stock sale will enable Ingram Micro to reward its key managers with stock options, Lacy said. He added that the restructuring will end a confusing management situation in which he was shuttling back and forth between Nashville and Santa Ana while serving as CEO of both the computer distribution business and the parent company.
“I’m happy,” Lacy said. “I’m getting a chance to run a public company again.”
Ingram Industries said the restructuring plans must clear a few hurdles, including an Internal Revenue Service ruling that the changes will not have “adverse tax consequences.”
Ingram Micro was formed in 1989 when Ingram Industries acquired a public Santa Ana company then known as Micro D Inc. Ingram had previously held a majority stake in Micro D.
There were problems when the companies joined, including an exodus of top managers and the loss of a major customer, Toshiba America. But the company quickly resumed the breakneck pace that has carried it from sales of $1.6 billion 10 years ago to record revenue of $5.8 billion last year.
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Ingram Micro Goes Public
As part of parent company Ingram Industries’ plan to split its holdings into three separate companies, Ingram Micro plans to issue public stock. The company will be headed by Linwood (Chip) Lacy Jr., who will give up his Ingram Industries positions.
Profile: Linwood A. (Chip) Lacy Jr.
Title: President/CEO, Ingram Industries; co-chairman/CEO, Ingram Micro. Relinquishes Ingram Industries titles Jan. 1, 1996
Education: bachelor’s of science in chemical engineering, 1967; master’s of business administration, 1969, both from University of Virginia
Background: Named chairman/CEO of Micro D in 1985; retained position when company became Ingram Micro in 1989. Assumed additional responsibilities as president of Ingram Industries in 1993 and named Ingram Industries president/CEO in June, 1995.
Residences: Nashville, Tenn., Richmond, Va., and Newport Beach
Family: Married 29 years to wife Constance; 3 children
Ingram Micro Development
Ingram Micro distributes more than 30,000 products for 850 companies worldwide. How it developed:
1982: Nashville-based Ingram Industries, a privately owned holding company involved in the distribution of books, magazines and videotapes, forms Ingram Computer, a computer products distributor.
1985: Ingram Computer begins buying stock of Micro D, a Santa Ana-based computer wholesaler.
1989: Micro D and Ingram Computer merge to form Ingram Micro, based in Santa Ana.
1995: Ingram Industries announces planned split into three independent firms: Ingram Entertainment, Ingram Industries and Ingram Micro, which it plans to take public in 1996.
Source: Ingram Micro
