Computer products distributor CHS Electronics Inc said Tuesday that it has agreed to sell off the majority of its European operations to a group of its senior managers there, led by chief operating officer Mark Keough. Under the terms of the deal, CHS will be relieved of a total of $250m in long-term debt and up to $47m worth of corporate guarantees. In addition, CHS will receive $11m in cash, or be relieved of an equivalent amount of liabilities, and receive a 10% equity interest in the buyout group, which is acting under the name Newco.
CHS estimates that, upon closing, the consideration it will receive from the deal will amount to roughly $300m. The operation changing hands generated sales of $2.8bn, or 41% of total company sales, for the nine months ended September 30. The new company is expected to immediately be among the top three distributors in Europe.
CHS said the move eliminates essentially all of its long-term debt and allows it to focus on its remaining European businesses. Those include an e-commerce business to be called CHSE.com that will ship products from a central distribution center in The Netherlands, as well as The PC Way, a European assembler of PCs through a joint venture with Korea-based Trigem Computer. á
