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UPDATE: Brightpoint's planned sale spawns uncertainty

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BrightPoint Inc.’s planned sale, which would eliminate one of Indiana’s six Fortune 500 companies, is casting uncertainty over Hendricks County, where the company has massive distribution operations and is one of the largest employers.

The Indianapolis-based cell phone distributor said early Monday that it would be acquired by California-based Ingram Micro Inc., the world’s largest technology distributor and supply-chain services provider, for about $840 million.

Brightpoint, headquartered on the northwest side, has about 1,300 employees in the Indianapolis area and about 4,000 worldwide. In a press release, Ingram did not specify job cuts but said it expects “to realize cost synergies and efficiencies in excess of $55 million” by 2014.

BrightPoint CEO Robert Laikin founded the company in 1989, when the cell phone industry was in its infancy. Ingram said that after the deal’s closing, Laikin will serve in a “senior advisory role” to its CEO, Alain Monie.

BrightPoint senior executives Mark Howell, Bruce Thomlinson, Anurag Gupta, and Vincent Donargo have "committed to senior roles within the new organization," the companies said.

Under the deal, Ingram would acquire all of BrightPoint’s common stock for $9 per share in cash. In premarket trading Monday, investors pushed up BrightPoint shares to $8.89, an increase of 64 percent, or $3.48, from Friday's close.

The $9 offer is a 35-percent premium to BrightPoint's 90-day average trading price.

The price includes about $190 million in BrightPoint debt.

"The transaction with Ingram Micro will deliver significant value to our shareholders and will enable us to accelerate our global growth strategy," Laikin said in a prepared statement. "This powerful combination will also provide compelling opportunities for BrightPoint's vendor partners, customers and employees to benefit from the financial strength, scale and broad geographic reach of the world's largest technology distribution company."

The acquisition must be approved by BrightPoint shareholders at a special meeting that is likely to take place in the third quarter. The deal is also subject to regulatory approvals. The companies said the deal should close by the end of the year.

"BrightPoint is a well-run company with leading, high-value services and solutions coupled with excellent distribution channels in the global mobility market," Ingram’s Monie said in a prepared statement. "BrightPoint's offerings are highly complementary to both our logistics and distribution businesses, which will enable us to go to market with the leading portfolio of mobility device lifecycle services and solutions."

BrightPoint was named one of the country's 500 largest companies in 2011, ranking 463rd with $5.2 billion in revenue. Ingram was ranked 81st, with $36.3 billion in revenue.

"This is the right time for this transaction," Laikin said. "I believe strongly that Ingram Micro is the best partner for our business and employees going forward, and I am excited at the prospect of BrightPoint becoming part of a Fortune 100 company."

Ingram Micro said it has obtained $300 million in debt financing from Morgan Stanley Senior Funding Inc. to help pay for the acquisition.

 

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  1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

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