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Systemax offloads North America problem child to PCM for $14m

Assets of US and Canada tech products group sold, rest to be shuttered

Ailing tech supplier Systemax looks to have dealt with the corporation’s problem child – it is selling “certain assets” of the North American Technology Group (NATG) to PCM for $14m and will shutter the rest.

The once mighty reseller has reported steep losses and falling sales this year; it has already closed 31 retail stores Stateside and the only part of the business that is consistently growing is non-tech related.

The deal includes the TigerDirect brand, the right to hire roughly 400 B2B sales reps across the region, the customer list and certain contracts, some vendor agreements, trademarks, fixed assets and equipment. The sales is expected to close on 1 December.

US reseller PCM said it expects the acquisition to beef up its footprint in the SMB, education, and public sector markets.

Frank Khulusi, PCM chairman and CEO said: “After we absorb the costs of bringing on this sales team, we expect their performance to ramp during 2016 ... we should be able to give more colour on these wonderful prospects as we integrate this acquisition.”

In the last quarter, revenues at the NATG slumped more than 30 per cent to $276.1m in calendar Q3, which is a far cry from those heady days when sales were more than twice this – that was before it exited retail and PC production.

The unit reported an operating loss for the quarter of $12.9m – and at the time said it was “exploring strategic alternatives as we move forward with our restructuring effort”.

The company has been caught out by sliding product margins in tech reselling and has struggled to find a solution. In contrast, the Industrial Products Group, also based in the US – which sells air-con units, office furniture, industrial gear and supplies – continues to account for a fatter proportion of sales.

Systemax CEO Richard Leeds, said in a statement: “PCM is a natural fit for our employees and their customers ... this will allow us to devote all of our time and resources on our other businesses and improving their position to capitalise on their growth opportunities”.

The organisation confirmed it will close its three remaining retail stores and the distribution centre, and once the PCM deal closes, “will completely exit its remaining North America Technology Group operations”.

In Europe, Systemax trades as Misco, but the local Technology Group here axed boss Pim Dale in the summer and hired former Insight operations exec Simon Taylor to steer a turnaround.

Of course, it is not beyond the wit of man that Leeds and co could look to find a buyer for the Euro ops if and when the P&L improves. ®

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