China's HNA to buy US tech firm for S$8.4 billion

HNA Group vice president Tan Xiangdong at a press conference in Beijing on Jan 11, 2016.
HNA Group vice president Tan Xiangdong at a press conference in Beijing on Jan 11, 2016.PHOTO: AFP

IRVINE, CALIFORNIA (AFP) - Chinese conglomerate HNA will buy US technology distributor Ingram Micro for US$6 billion (S$8.4 billion), a statement said, the latest firm to snap up a foreign entity as part of Beijing's outward investment drive.

Tianjin Tianhai Investment, a unit of HNA, will pay US$38.90 per share in an all-cash transaction, New York-listed Ingram Micro said in a statement, representing a 31 per cent premium to its Wednesday (Feb 17) closing price. Ingram Micro distributes products for the likes of Apple, Microsoft, IBM and Cisco with more than 200,000 customers in approximately 160 countries, it says on its website.

The move comes as Beijing looks to encourage companies to invest abroad to secure raw materials and seek out reliable returns as the economy at home struggles.

State-owned China National Chemical Corp. this month offered $43 billion for Swiss pesticide and seed giant Syngenta - which would be the biggest-ever overseas acquisition by a Chinese firm if completed.

The HNA deal will be among the top ten most valuable acquisitions made by a Chinese company, according to data from research firm Dealogic. HNA - best known as a parent of Hainan Airlines - said the acquisition would help grow its business overseas and transform its existing logistics unit.

"Ingram Micro has clearly established itself as a leading distributor and global provider of IT products and services," HNA chief executive Adam Tan said in the statement. "After the transaction, Ingram Micro would become the largest member enterprise of HNA Group in terms of revenue, and facilitate the internationalization process of the group.  With the help of Ingram Micro, HNA Group would have access to business opportunities in emerging markets, which have higher growth rates and better profitability. Furthermore, the addition of Ingram Micro would help the logistics sector of HNA Group transform from a logistics operator to a supply chain operator, and provide one-stop services while improving efficiencies."

The transaction, which has already been approved by the boards of both companies, is expected to be completed in the second half of the year. Ingram Micro will remain headquartered in California and the current management team will stay in place, the statement said.