CDW to Buy Micro Warehouse’s North American Business

The big get bigger: Computer reseller CDW Corp. is buying the North American assets of rival Micro Warehouse for $22 million. According to CDW, the U.S. and Canadian operations of privately held Micro Warehouse bring in roughly $940 million in annual revenue.

Norwalk, CT-based Micro Warehouse will retain its overseas business, which accounts for approximately $1 billion in sales. Last year Vernon Hills, IL-based CDW had net income of $185.2 million on sales of $4.265 billion.

According to a Reuters report, analysts from A.G. Edwards & Sons wrote following Monday’s announcement that “we believe that this is a good purchase for CDW as the company is essentially buying $1 billion in revenues for $22 million…We do not believe, however, that Micro Warehouse was profitable at a $1 million annualized run rate so we expect to see a significant amount of block-and-tackling on CDW’s part to get these operations up to corporate profitability levels.”

CDW says that the purchase makes it the largest dealer of Apple Computer products in the country. What’s more, CDW estimates that 75% of Micro Warehouse’s corporate and public-sector customers are not part of CDW’s house file.

CDW expects to have Micro Warehouse’s employees and operations completely integrated by the end of the year. It estimates that transition costs, including severance, will total $10 million-$12 million and will be incurred primarily in the fourth quarter.

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