A leading distributor of wireless devices, Brightpoint Inc. (CELL) has bought a 23% stake in Intcomex, Inc, a leading provider of IT products in Latin America and the Carribean region.
Brightpoint will have to pay $15 million in cash for the acquisition. However, as per the deal, Intcomex will be allowed to sell its products through Brightpoint’s dealers.
This mutual relationship between Brightpoint and Intcomex will benefit Brightpoint in two ways. Firstly, controlling a 23% stake will allow Brightpoint to have a presence in Intcomex Board of Directors. Secondly, it will allow Brightpoint to access the Latin American and the Caribbean markets where Intcomex is well positioned for over 20 years.
Currently, Intcomex holds a chain of approximately 44,000 resellers, retailers and customers across Latin America and the Caribbean region. Following the acquisition, Intcomex will allow Brightpoint to establish a strong foothold in the Latin America and the Caribbean region.
Similarly, for Intcomex, which specializes in the distribution of IT products, can expand their portfolio by distributing wireless devices and providing expert services to its clients.
Even the manufacturers, providing service in the Latin American and Caribbean markets, will benefit out of this deal, whereby they will have multiple options to distribute their goods and services to the wireless and IT industries.
Presently, Latin American countries like Brazil and Argentina exhibit strong signs of growth. Hence, its presence in those regions will provide huge opportunities for growth in the upcoming years.
Earlier, Brightpoint completed the acquisition of privately-held Touchstone Wireless Repair and Logistics, a leading provider of repair and reverse logistics services to the wireless industry. Brightpoint paid $80 million in cash for the acquisition and expects this deal to be slightly accretive to its fiscal 2011 EPS.
The company will now integrate Touchstone’s state-of-the-art asset management and product recycling activities to offer a whole bunch of innovative supply-chain management systems in more than 25 countries.
Brightpoint already has a solid supply-chain agreement with large mobile handset developers such as Research In Motion Ltd. (RIMM), Nokia Corp. (NOK), and HTC Corp. Such relationships will further strengthen its network.
We, thus, maintain our long-term Outperform recommendation for Brightpoint Inc. Currently, Brightpoint Inc. has a Zacks #1 Rank, implying a short-term Strong Buy rating on the stock.
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