IRS Ruling Clears Way for Spinoff of Ingram Micro

Clearing the way for one of the largest initial public stock offerings in Orange County history, Ingram Industries Inc. said Friday it has obtained a favorable ruling from the Internal Revenue Service to spin off its Ingram Micro Inc. subsidiary.

Santa Ana-based Ingram Micro is the world’s largest distributor of computer products, and is part of privately held Ingram Industries, a vast, family-controlled conglomerate based in Tennessee.

For nearly a year, company officials have been planning to spin off Ingram Micro from the rest of the company and sell stock in the distribution giant to the public. But those plans hinged on obtaining a ruling from the IRS that such a transaction would not lead to hefty taxes on the Ingram family and other current shareholders.

David Dukes, vice chairman of Ingram Micro, said the IRS has “approved the tax-free exchange of shares among Ingram Industry shareholders.” That means existing shareholders won’t pay taxes on their holdings unless they later decide to sell their shares in Ingram Micro after it becomes a publicly traded company.

The stock sale is expected to take place sometime in November. According to documents filed with the Securities and Exchange Commission, Ingram Micro intends to sell about 20 million shares of stock, possibly raising as much as $280 million for the company as it pushes to expand its market share in the computer products distribution business.

Ingram Micro has a reputation as a well-managed and supremely efficient company, but it has been uncharacteristically clumsy in executing its spin-off plans. The most significant setback came last May, when Linwood A. Lacy, the company’s longtime chief executive, abruptly resigned in a squabble with the Ingram family.

The company recently replaced Lacy by hiring Jerre L. Stead, a former AT&T; executive who has taken the unusual of step of declining a salary and instead relying exclusively on stock options for his compensation.