CHS Electronics Inc., an international distributor of microcomputer products, announced an agreement to purchase BrightStar Corp., a start-up wholesale distributor of cellular phones and accessories, the companies said.
CHS will use cash and shares of stock to pay for the acquisition, but other terms of the transaction were not disclosed.
BrightStar distributes products for wireless device manufacturers, including Motorola Inc., Nokia Corp., L.M. Ericsson, Philips Electronics NV and Audiovox Corp. Two-thirds of the company’s sales are in the United States and the rest come from Latin America.
CHS distributes microcomputers, peripherals and software products to more than 120,000 resellers in 44 countries in Africa, Asia, Europe and Latin America. The company distributes a limited product line outside the United States for a limited number of computer manufacturers. CHS believes its focused distribution “enables it to respond more quickly to customers, provide better services and reduce inventory and working capital requirements.”
Both Miami-based distributors believe their product offerings will complement one another to bolster worldwide sales. “On the horizon is clear evidence that telecommunications equipment like the wireless handsets distributed by BrightStar will be combined with the kind of microcomputer equipment that CHS distributes around the world,” said Claudio Osorio, CHS chairman and chief executive officer.
“We will be able to use the existing CHS infrastructure to help BrightStar expand in new directions, and by making BrightStar part of our company we add a strategically important telecommunications dimension to our business.”
“The reason for the acquisition is the convergence between IT and wireless communications,” said BrightStar President and CEO R. Marcelo Claure. “For example, many wireless manufacturers, such as Nokia Corp., have developed infrared technology.
“Our intentions are to position CHS as a global distribution company,” said Claure. “We plan to hire local management and integrate the wireless division into the different CHS locations worldwide.”
BrightStar closed fiscal 1998 Sept. 30-just after celebrating the company’s first anniversary-with sales of about $66 million, Claure confirmed. He anticipates sales to nearly double to approximately $120 million during fiscal 1999. Claure said the company is “very profitable,” but did not disclose the company’s net income.
Osorio noted significant synergies and economies are possible since both companies are wholesale distributors of electronic equipment, and that BrightStar’s growth potential is enhanced because its markets are highly fragmented, much like the markets CHS has been growing over the past several years.
