Arrow Electronics buys Computacenter tech disposal biz for £56m

Reseller recycles cash, politely hands it to shareholders

It may be cold outside, but Computacenter (CC) investors have got a warm glow this morning – they are to receive a £100m windfall, partly financed by the sale of the tech disposal and asset recovery biz.

The London-listed tech supplier last night revealed to the City the sale of RD Trading (RDC) for £56m in cash to the UK arm of Arrow Electronics, a price that equates to just over 12 times the sub’s most recent EBITDA of £4.5m.

Mike Norris, CEO at CC, told us this morning the board were not looking to sell the recycling arm but had received an offer that was simply too good to turn down.

“For us, its about the corporate client, our business is pretty clear. We liked RDC being part of our organisation but it wasn’t core,” he said.

The recycling biz provides logistical management of collections, technical processing, and secure data eradication or destruction, and re-marketing of refurbished kit.

The cash haul from the sale will be topped up by CC’s existing funds generated in normal trading to give shareholders a reason to cheer. This is the second such return to investors – in 2013 CC gave them £75m.

RDC was founded in 1991 and acquired by CC in 1999, but was not operationally integrated into UK ops, running on a separate IT system at its own location, and with only a material presence in CC’s mainland Europe ops.

Gerry Hackett, RDC managing director, will transfer with the business (along with 366 current staff) in the same role. In the year ended 31 December, RDC made a pre-tax profit of £3.65m on sales of £41.9m, and had gross assets of £15.8m.

Under the terms of the deal, which is not subject to any outstanding conditions, CC will outsource its tech disposal and related asset recovery services to RDC for five years.

The rationale for Arrow, which has already swallowed several similar recycling outfits including Global Link Technology and Asset Recovery Corporation, seems to be to build a global footprint.

In a statement, Arrow CEO Michael Long said the buy “further broadens” its “value recovery business” in Europe. “RDC will allow us to better address the growing requirements of our global customers”. ®

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