Ingram Micro Makes Offer for Singapore Distributor

In a move that increases its presence in Asia while taking advantage of relatively low stock prices, Santa Ana-based Ingram Micro Inc. said it has submitted a bid to buy a Singapore electronics distribution company.

The offer to buy Electronic Resources Ltd., if fully exercised, would cost $220 million.

Ingram said it paid $50.1 million, or $1.18 a share, for an 18.7% stake in Electronic Resources, a computer distributor that is particularly strong in China, Malaysia and Singapore. The amount is a 30% premium over the previous closing price for Electronic Resources.

In December 1997, Ingram acquired 20.9% of the company for $1.35 a share, giving the Santa Ana company its only presence in Asia, excluding Japan.

According to Singapore law, once a company acquires more than a 25% stake in a publicly held company, the acquiring company is required to offer to buy all the remaining shares in the company at the highest price it paid in the previous 12 months.

Electronic shareholders have three weeks to tender their shares.

“Until that point, we don’t know what percentage of the company we’ll own,” said Kim Strohm, Ingram’s vice president of investor relations. “It is our goal to have a controlling interest but not necessarily to own 100%. We would be pleased with a majority interest.”

An acquisition would give Ingram a distribution channel in Asia outside Japan, where it has a partnership with Softbank Corp.

Outside Japan, Electronic Resources is the second-largest distributor of computer products and services, Ingram officials said, with revenue of $981 million and income of $12.8 million in 1997, the last full year for which figures are available.

Analysts said the acquisition gives Ingram a toehold in the relatively underdeveloped Asian technology distribution channels at a time when Asian stock prices have been suppressed because of the currency crisis.

“The idea is to have your foot in the door as that market rebounds,” said Brett Miller, a technology distribution analyst with A.G. Edwards.

Given the size of Ingram, which has had $20.9 billion in sales over the last four quarters, this purchase won’t have a material impact on earnings soon, said Ian Morton, an analyst with Hambrecht & Quist.

“They get some benefit right out of the chute, and it’s in the strategic role of broadening their global presence, but it’s not a barnburner,” Morton said.