Al Falak signs deal to acquire MSO

Saudi solutions company Al Falak Electronic Equipment & Supplies buys up distributor Mishaal Al Sudairy

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By  Julian Pletts Published  June 18, 2008

The Saudi IT distribution channel has seen its first major piece of consolidation of this year so far after Al-Falak Electronic Equipment & Supplies confirmed that it has reached a deal to acquire Mishaal Al Sudairy (MSO).

Channel Middle East can exclusively reveal that Al-Falak will extend its reach in the Saudi IT market by purchasing 100% of MSO in a cash-based agreement.

"This deal tells everybody in the Saudi IT market that to continue you have to become bigger, more efficient and diversify," declared Ahmed Ali Ashadawi, CEO at Al-Falak. "With this acquisition we have added more customers and more vendors, but most importantly we have added some very good people that will satisfy the increasing needs of the market."

MSO is responsible for distributing some of the biggest names in the enterprise software and components sectors including Symantec, Microsoft, Adobe and AMD.

Although no formal earn-out agreement is in place for the MSO management, Ashadawi does not anticipate the departure of senior staff.

"We have already ascertained that we need everybody and the expansion that we are aiming for will be boosted by the acquisition," said Ashadawi. "The staff are free to stay or leave as they please. We know that we are a good company and that they want to join us, so we didn't have to worry about an earn-out agreement."

Ashadawi feels that enterprise end-users in the Saudi market want to deal exclusively with one IT body that can answer all of their needs, from systems integration to distribution, and that Al-Falak is now in a stronger position to answer this desire.

The Al-Falak group does not plan to stop at the acquisition of MSO. It claims to be in the final stages of talks to carry out an even larger acquisition which would increase Al-Falak's overall operational volume by at least half. This acquisition, says Ashadawi, involves a company that specialises in operational maintenance of servers and software development and that the deal is due to go through by the end of the year.

Furthermore, both of these acquisitions will play a large part in Al-Falak's ultimate aim. "We hope to go public within two years or so," revealed Ashadawi. "The challenge is really to create good, solid profits and succeed in the acquisition because going public is based on future cash projections or profitability, so we have to make sure that when we do this we have built up a valuable company."

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