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November 7, 2014
martinwolf Transaction Analysis

CDW Acquires Minority Stake in Kelway, With Option to Fully Acquire by 2017

 

Financial Information*

  • Enterprise Value                               240 Million ($380 Million USD)
  • EV/2014 Revenue                                                                         0.46x
  • EV/2014 EBITDA                                                                           7.27x

Transaction Facts

  • IT Solution Provider CDW (Nasdaq:CDW) announced yesterday it had acquired 35 percent of privately-held UK-based solution provider Kelway, with the ability to acquire the remaining 65 percent by mid-2017.
  • While this transaction is CDW's first acquisition outside of the United States, the two companies have been strategic partners for the past 18 months. 
  • Financial information for the transaction was not officially disclosed, but valuations from media reports are in-line with industry valuations for solution providers as tracked by the MW Scoreboard.
Search for Growth Leads to Familiar Partner
  • Serving Cross-Border Enterprise Clients: Acquiring UK-based Kelway strengthens CDW's ability to serve cross-border enterprise accounts, positioning the company well for future growth and providing more control, particularly as it builds its services offerings.
  • Pushing Beyond Traditional Limits: CDW has not been acquisitive in the past - its last major acquisition was of Berbee Information Networks in Sept. 2006 for $184 million. However, CDW previously had a strategic partnership with Kelway, and slowing growth in CDW's core markets has led the company to consider converting this partnership to an outright acquisition.
  • PE Exits After Strong Growth: It was reported last year that Kelway had outgrown PE backer Core Capital. Beginning with a 5 million investment in Nov. 2006, their partnership has grown to 8.5 million while revenue grew from 45 million to 530 million in a combination of organic growth and seven acquisitions. According to media reports, Core Capital is receiving a significant payout of 76 million ($120M) in exchange for its 29 percent equity stake.
  • CDW Sees Opportunity to Remain on Top: CDW has remained at the top of its peer group since it held its IPO in June 2013. By acquiring a longtime partner, and completing the acquisition in stages rather than buying Kelway outright, CDW is opting for a high-potential expansion while reducing integration risk.

 For more information, view the press release by clicking here.


 
martinwolf was not the advisor in this transaction.

 

*Financial information was not disclosed publicly, but media reports citing persons familiar with the matter provided the figures included above.

About martinwolf    

 

                
                Walnut Creek, CA                                                Bangalore, India

With offices in the San Francisco Bay Area and Bangalore, India, martinwolf is a leading middle market M&A Advisory focused on companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 125 transactions in sixteen countries and sold seven divisions of Fortune 500 companies. 

 

The firm is also a presenting sponsor of the Global IT M&A Forum.   

 

martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.  

 

To learn more about martinwolf, contact Matthew Putzulu at mputzulu@martinwolf.com.

 

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