Ingram Micro Plans Public Stock Offering
With a curious sense of timing, giant Ingram Micro Inc. has filed for permission to sell stock to the public for the first time despite a softened market for technology issues and the fact that the company hasn’t replaced its recently departed chief executive.
The Santa Ana-based company, which until now has remained a private firm even though it is the largest computer products distributor in the world, plans to offer 20 million shares of stock.
Though no initial offering price was mentioned in documents filed Friday with the Securities and Exchange Commission, the shares were registered at a maximum offering price of $14 per share, meaning the sale could raise as much as $280 million.
Ingram, which is owned by Nashville, Tenn.-based Ingram Industries Inc., disclosed last year that it intended to sell stock to the public sometime in 1996. But those plans were thought to have been jeopardized when Linwood A. Lacy, the company’s longtime chief executive, resigned abruptly two months ago following a management squabble with Martha Ingram, chairwoman of the parent company.
Lacy, known as “Chip,” was widely credited with being the driving force behind Ingram, building sales from about $2 billion five years ago to $8.61 billion last year. Net income during that time soared from $30.2 million to $84.3 million. The company employs about 8,200 people.
Company executives were not available for comment, although Ingram spokeswoman Kirsten Frosh said that “the search for Lacy’s replacement is well underway.”
Analysts said that selection process will be closely watched as the company moves toward its stock offering.
Lacy “was the key factor, the key person, and you really identified Ingram with him,” said Theodor Kundtz, an analyst at Lehman Brothers in New York City. “You’d feel more comfortable if he were there, and people are clearly going to be watching who is going to take over.”
But analysts also stressed that an Ingram Micro stock offering is likely to succeed even without Lacy because the company has a deep management team, and its numerous divisions and locations are well run.
The timing of the company’s filing caught some off guard because the market for technology stocks, so overheated throughout much of the past year, has cooled considerably in recent weeks.
Earthlink Network Inc., an Internet service provider in Pasadena, and a number of other technology firms have even backed away from public offerings in recent days as technology stocks plummeted amid growing concern about demand for computers and other products.
Ingram Micro is not immune from those market forces, and its profit margins have thinned in recent years. But analysts said the company continues to grow rapidly and, compared to manufacturers, is not as vulnerable to the price wars and inventory pileups that plague the computer industry.
Besides, analysts said, demand for technology stocks could be soaring again by late September, the soonest Ingram’s offering is likely to hit the market, as a wave of new products expected in the fall could boost demand.
The 20 million Class A shares to be issued will represent about 15% of the outstanding stock in the company, but less than 2% of the voting power, according to the SEC filing. If the stock is sold at $14 per share, the overall market valuation of Ingram Micro could easily exceed $1 billion, far surpassing the market values of its chief competitors, including Merisel Inc. in El Segundo.
The proceeds from the Ingram offering are intended to repay a portion of the company’s $850-million debt, a reflection of the extent to which Ingram has borrowed to finance its rapid expansion.
According to the filing, 16 million shares will be sold in the United States and 4 million overseas. The company said it has applied to have the shares traded on the New York Stock Exchange under the symbol “IM.”
The company’s filing also said that its U.S. underwriters have an option to purchase up to 3 million additional shares at the offering price to cover any excess demand for the stock.
The company, which carries more than 36,000 products, said the offering will not be made until the SEC completes its review of plans to spin off Ingram Micro from Ingram Industries, which also owns a number of other companies ranging from book wholesaling to river barge shipping.
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Ingram Micro at a Glance
* Founded: 1979 as Micro D. In 1989, it became Ingram Micro after merging with Ingram Computer
* Headquarters: Santa Ana
* Acting CEO: John Ingram
* Employees: 8,200
* 1995 sales: $8.61 billion
* Business: World’s largest computer products distributor
* Owner: Ingram Industries, Nashville, Tenn.
* Proposed stock offering: 20 million shares registered with a maximum offering price of $14 per share.
Source: Ingram Micro, Times reports
Researched by JANICE L. JONES / Los Angeles Times
