Speculation increases over Tech Data Middle East future

Speculation is building about the future of Tech Data’s Middle East operation following continued talk in the market that all or part of the business is on the verge of being sold. A number of companies continue to be linked with the broadline distributor, which turns over more than US$300m a year in the Middle East.

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By  Andrew Seymour Published  March 20, 2007

Speculation is building about the future of Tech Data’s Middle East operation following continued talk in the market that all or part of the business is on the verge of being sold. A number of companies continue to be linked with the broadline distributor, which turns over more than US$300m a year in the Middle East. Channel Middle East understands that Tech Data Middle East staff were informed last week that the company is being “pursued” by several potential suitors. “There was an announcement made in the office that Tech Data will be sold and there are three companies in the frame,” claimed one source. “They are talking about a takeover to happen by April, but have reassured employees and told them it will not have any impact.” Any move to abandon the Middle East market would cap a remarkable U-turn for the company. Earlier this year, Tech Data reiterated its commitment to the region and unveiled ambitious plans to address the Saudi market. However, its subsequent struggle to build an operation in the Kingdom could be one of the reasons why the firm is rumoured to be re-considering its presence in the region. “There are certain countries where Tech Data can’t have 100% ownership and that probably makes it difficult to finish business,” alleged one distribution source. “More and more vendors are asking for in-country presence. It doesn’t make sense to be sitting in Dubai and doing business in other countries. One option is to reduce [the business] and make it a UAE-based company, in which case you are confined to Jebel Ali and you have to reduce staff. The other option is exiting completely.” Uncertainty over Tech Data’s future in the Middle East has been further clouded by the company’s decision to cancel distribution contracts with HP and Acer. Fujitsu Siemens is also believed to have been impacted by its move to reduce brands although the vendor has so far failed to respond to Channel Middle East’s requests to clarify the situation. The decision to part company with some of its key vendor partners leaves Tech Data with a predominately components-led business as well as its enterprise-focused Azlan division. Azlan carries a number of high-end brands, including Cisco. Several names continue to be linked with Tech Data Middle East, including arch-rival Ingram Micro, which has admitted it is still interested in expanding into the region at some stage. Senior management at both Ingram and Tech Data denied any truth in the speculation last week though. Pan-regional distribution giant Aptec is also rumoured to be chasing a tie-up with Tech Data. Aptec CEO and chairman Ali Baghdadi declined to comment on the Tech Data speculation when contacted by Channel Middle East earlier this week. However, Aptec has since called a press conference later this week where it intends to announce “major Middle East expansion plans”. The firm has not indicated if this involves some form of agreement with Tech Data, but it is promising to unveil a “new business structure.” Tech Data Middle East boss, Hanspeter Eiselt, could not be reached for comment.

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