RealTime IT News

Computer Reseller CDW Sells For $7.3B

Technology reseller CDW  has agreed to merge with private equity firm Madison Dearborn Partners in a deal worth about $7.3 billion.

MDP said it is offering shareholders $87.75 in cash for each common stock they hold. That's about a 16 percent premium over CDW's closing share price of $75.56 Friday before published reports about a possible deal for the online retailer of computers and electronic gear hit the marketplace.

The deal puts one of the more successful retailers of computer gear in the spotlight at a time when other direct sellers such as Dell, are eyeing the CDW business model of selling direct to resellers over just selling direct to consumers.

CDW is considered one of the more successful sellers of computer and electronics to businesses and the government. But it's more than a successful reseller to a vast network of resellers, or value-added resellers (VARs).

It's also an Internet retailer, which distinguishes it from Best Buy, CompUSA and Circuit City, bricks and mortar electronics retailers that have been under pressure by online retailers. CompUSA, for example, recently said it would close 126 of its 229 stores in the United States and Puerto Rico by the end of May.

"Even though CDW is significantly smaller than [those retailers], it can be a viable competitor to Amazon.com. too" because of its online presence, noted Van Baker, analyst and vice president with research firm Gartner.

"By making sure CDW focuses on the products its customer base wants, and delivers a good experience, such as turnaround time and customer service," it's a different mix for online retailers of electronics, he added.

Other deals could emerge as well.

CDW said that, before approving the merger agreement, the company's board of directors conducted an auction process in which a number of potential bidders participated.

Under the agreement, officials said, CDW will, with the assistance of Morgan Stanley, actively solicit proposals from third parties during the next 30 days.

"CDW advises that there can be no assurance that the solicitation of proposals will result in an alternative transaction," the company said in a statement.

Still, another suitor appears unlikely to sweeten a 16 percent premium price that MDP offered. The deal is expected to close by the end of the third quarter this year.

Investors registered their approval of the deal, with CDW shares jumping close to 2.5 percent to $85.18 during regular trading today.

As for how the tech-selling site will fare as a private entity within the MDP constellation of companies, a company spokesman did not return a request for comment.