View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
October 11, 1998


By CBR Staff Writer

Inacom Corp is acquiring fellow consulting and services outfit Vanstar Corp in a stock swap valued at about $480m. Vanstar will merge with a wholly-owned subsidiary of Inacom, creating a 12,000-strong, $7bn company, which the two say will be the world’s largest provider of Intel-based computer equipment from IBM Corp, Hewlett-Packard Co and Compaq Computer Corp. Services personnel will number 7,300 and annual revenues from that area will total $800m. Terms of the deal, which will be accounted for as a tax-free pooling of interests, call for Vanstar shareholders to receive 0.64 shares of Inacom common stock for each Vanstar share. Based on Thursday’s closing price, the payment amounts to roughly $10.75 per Vanstar share, a nearly 29% premium over Thursday’s close. The deal will also see Inacom assume $120m in Vanstar debt and about $195m in Vanstar preferred shares, making the total price of the deal to $795m. Warburg Pincus Capital Company LP, which holds about 38% of the outstanding Vanstar stock, and the members of the boards of both companies have committed to vote in favor of the merger. Inacom will take on additional directors, including Vanstar chairman and chief executive Bill Tauscher, a managing director at Warburg Pincus and two other members to be named from Vanstar’s current board. The deal is expected to close in either the fourth quarter of this year or the first quarter of next year and Inacom reckons it will be accretive to earnings by the end of 1999. The company will take a one-time merger-related charge in the range of $120m to $155m, as well as incur additional costs of $40m – $80m related to the integration and alignment of the combined entity. All that wrangling is expected to cut costs by about $150m per year. Vanstar shares fell $0.4375 to $7.9375 on Friday, while Inacom dropped $0.9375 to $15.875.

Websites in our network
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy