MW Transaction Analysis
Best Buy Sells mindSHIFT to Ricoh Company
- Ricoh Company, Ltd. (TSE:7752), an office supply and digital imaging company based in Tokyo, announced today that it had entered into an agreement to acquire mindSHIFT Technologies, Inc. from Best Buy Co., Inc. (NYSE:BBY).
- Best Buy previously acquired mindSHIFT in November 2011 for $167 million, and at the time many observers expected Best Buy to use the acquisition to grow its services offerings and complement its consumer services business (primarily its Geek Squad division).
- In 2012, mindSHIFT acquired White Glove Technologies, a SMB-focused managed services provider, gaining a strong regional market presence in the Southwest U.S. and bolstering its access to the SMB marketplace. Previously, it had acquired three other managed services companies in 2011, 2010 and 2008.
- According to the press release announcing the deal, mindSHIFT works with 6,900 clients - approximately 1,500 more than when they were initially bought by Best Buy.
Focusing on Core Services versus Expanding Capabilities
- Focusing on Core Services: Despite growing mindSHIFT's customer base by approximately 30%, Best Buy realized succeeding in the managed services space required significantly more resources than they were able to commit at the current time.
- Divesting Non-Core Assets: Best Buy announced disappointing earnings for the 2013 holiday season, and its shares have dropped more than 30% as investors look for signs of a turnaround. The divestment of mindSHIFT is a sign that the company is retrenching itself in an attempt to address these core issues.
- Expanding Capabilities: Conversely, Ricoh is looking to expand beyond its core offerings to compete better with its competitors, such as Konica Minolta's All-Covered. mindSHIFT is an attractive asset, with significant size and reach in the SMB market and few similarly sized competitors.
- Early Indicator of Future M&A: The Japanese market is slowly recovering after a long slump, and this combined with historically low interest rates provides an opportunity for Japanese companies to shop for proven assets across the globe.
For more information, read the press release here.
martinwolf was not the advisor in this transaction.
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