Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Ingram Micro Inc. Surged Today

By Timothy Green - Feb 18, 2016 at 12:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The IT wholesaler is being acquired by a Chinese firm for a hefty premium.

What: Shares of IT wholesale distributor Ingram Micro (IM) soared on Thursday after the company announced that it had agreed to be acquired by Chinese firm Tianjin Tianhai. At 11:30 a.m. EST Thursday, the stock was up about 21%.

So what: Tianjin Tianhai is paying $38.90 per share in cash for Ingram Micro, putting the equity value of the transaction at roughly $6 billion. The price of the deal represents a 39% premium over Ingram Micro's average closing price during the thirty-day period ending on Feb. 16. The company expects the transaction to close during the second half of 2016, although regulatory issues may slow down, or even derail, the deal.

Upon the closing of the transaction, Ingram Micro will operate as a subsidiary of Tianjin Tianhai, and as part of HNA Group, an aviation, tourism, and logistics company that is the largest shareholder in Tianjin Tianhai. The company will retain its current slate of executives, and remain headquartered in Irvine, California.

Now what: Ingram Micro CEO Alain Monie pointed out the benefits of being acquired. "As a part of HNA Group, we will have the ability to accelerate strategic investment, as we continue to capitalize on the constant evolution of technology and emerging trends by adding expertise, capabilities and geographic reach," Monie said. "Additionally, Ingram Micro will now be part of a larger organization that has complementary logistics capabilities and a strong presence in China that can further support the growth and profitability objectives of our vendor and customer partners."

For Ingram Micro shareholders, the deal price of $38.90 per share is the highest price the stock has traded for since the dot-com bubble. Given the hefty premium, which values the company at nearly 32 times trailing-12-month earnings, it seems unlikely that a better offer will surface.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ingram Micro Inc. Stock Quote
Ingram Micro Inc.
IM

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.