Cisco Systems Inc’s largest equipment distributor Westcon Group Inc is making a second attempt to float on the stock market to fund loan repayments and future acquisitions.
Terrytown, New York-based Westcon resells networking and communications equipment from vendors including Avaya, Nortel Networks and Nokia through its ComStor and Voda One divisions to VARs, systems integrators and network operators. Lehman Brothers is the lead manager of the proposed offering, which will be co-managed by Merrill Lynch, SG Cowen and Robert W Baird & Co.
Westcon is currently 92.5% owned by South African network reseller and integration firm Datatec Ltd, which attempted to float Westcon on Nasdaq in December 2001, before pulling out at the last minute due to unfavorable market conditions. Datatec had also hoped to sell shares in its two other main subsidiaries, UK-based IT services company Logical, and telecoms consultancy Mason Communications.
In the nine months to November 30, 2003, Westcon made a net profit of $6.5m compared to a loss of $88.1m in the year-ago period, on revenue that increased 10.4% to $1.36bn. Comstor, the Cisco distribution operation, accounted for 61.4% of revenue, with the Westcon operation (main vendor Nortel) accounting for 29.4% and Avaya specialist Voda One representing 9.2%.
According to Westcon’s SI document filed with the Securities and Exchange Commission, the company plans to use $5.7m of the proceeds raised from the flotation to pay a loan to its parent company, with some funds used as a war chest for acquisitions. In May 2002, Westcon gained a European operation following the takeover of certain assets of bankrupt Dutch networking products distributor Landis NV.
This article is based on material originally published by ComputerWire