Information technology spending is growing significantly -- that is, in other countries such as China and India. According to an IDC study, China's IT growth is expected to be 15% annually and India's about 20%.
This is certainly an attractive environment for distributors of IT products and services, such as Tech Data Corporation (NASDAQ:TECD), SYNNEX (NYSE:SNX), and Arrow Electronics (NYSE:ARW).
Another big player: Ingram Micro (NYSE:IM). Since 1997, the company has been investing in the Pacific region. Yesterday, Ingram continued its investments by making a purchase of Tech Pacific for $493 million.
Founded in 1981, Tech Pacific is a leading IT distributor in Australia, New Zealand, India, Hong Kong, Malaysia, Singapore, and Thailand. The company has more than 25,000 resellers and 10,000 products.
Essentially, the acquisition doubles Ingram Micro's market share in the Asian-Pacific region. The deal will also provide Ingram with a seasoned management team, with the CEO and CFO staying on board. Apparently, the management team has run a very disciplined operation -- making a deal much easier to carry out.
In fact, the transaction had a short timeline, with Tech Pacific contacting Ingram Micro two months ago. The rumor was that Tech Pacific was exploring an IPO. However, with the IPO market shaky, a merger probably was a more realistic exit.
While Ingram Micro has made headway in Asia, this deal will definitely turbocharge the business. And the company did not pay a premium for the deal, as the transaction will be accretive to earnings for fiscal year 2005 -- not bad for penetrating a long-term growth market.
Fool contributor Tom Taulli does not own shares mentioned in this article.
