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UPDATE: BrightPoint sale follows tough stretch for firm

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BrightPoint Inc.'s decision to sell to a California company for $840 million followed a tumultuous five months for the Indianapolis cell phone distributor during which its stock price fell by more than half.

Analysts said BrightPoint's sale to Santa Ana-based Ingram Micro Inc. makes sense in light of the soft cell phone market and the company's recent struggles.

Ingram Micro, the world's largest technology distributor, agreed to pay $650 million in cash and assume $190 million in BrightPoint debt. The per-share price—$9—is a 66-percent premium to BrightPoint's closing price on Friday. But it's well below the stock's 52-week high of $12.05 reached Feb. 1.

BrightPoint lowered its earnings forecast in late February following the loss of major customer Cricket Communications Inc. BrightPoint said it handled 6.8 million wireless devices last year on behalf of Cricket.

The company also has been hurt by the sinking fortunes of Research in Motion Ltd., the Toronto-based maker of the Blackberry. RIM had accounted for about 10 percent of BrightPoint's distribution business.

BrightPoint announced the Ingram Micro deal early Monday morning, a short time after releasing a statement saying it expected to post a 2-cent-per-share loss in the second quarter. In the statement, the company withdrew its prior financial guidance for the rest of the year.

BrightPoint shares surged Monday morning and were trading at $8.80 close to midday.

BrightPoint handled a record 112.2 million devices in 2011. Becoming part of the far-larger Ingram could help BrightPoint push that volume to another record this year, according to an analyst tracking the company who declined to be identified.

“It’s definitely a tough business environment out there and I think scale and global reach is becoming increasingly important,” he said. “BrightPoint does have good global scale but Ingram will take it to another level.”

BrightPoint has about 1,300 employees in the Indianapolis area, most of them in Plainfield, and about 4,000 worldwide.

BrightPoint and Ingram Micro did not say what impact the deal would have on BrightPoint's presence in the Indianapolis area or on the company’s overall work force. But the merged companies expect “to realize annual cost synergies and efficiencies in excess of $55 million by 2014," they said in a joint statement.

Executives of both companies declined to be more specific in a conference call with analysts late Monday morning.

“We’re considering all factors of potential synergies and integration opportunities, but we’re not going to go into further detail,” said Bill Humes, Ingram’s chief operating and financial officer. “We will update further going forward, but I do believe there are some great opportunities.”

Plainfield Town Manager Rich Carlucci said he hopes his community fares well in the acquisition and said BrightPoint's ownership of two large warehouses there should help its cause. One is in AirTech Park and the other in AllPoints Midwest.

“I would assume those are positives,” he said, “but we’ll have to see how this shakes out.”

BrightPoint laid off an undisclosed number of employees in March and decided not to fill another 120 open positions. BrightPoint has warehouse and distribution operations in Plainfield, where the company was founded in 1989. The company's headquarters is on the northwside side of Indianapolis.

Perhaps the biggest blow to BrightPoint came in late May when Research in Motion said it wouldn’t turn a profit in the current quarter and that it had hired investment bankers to explore strategic options, suggesting the company might be sold.

BrightPoint’s stock price dropped 21 percent the week following RIM’s announcement.

Completion of the Ingram deal would cause Indiana to lose one of its six Fortune 500 companies. BrightPoint ranks 463rd on the list, with $5.2 billion in revenue. Ingram, with $36.3 billion in revenue, ranks 81st.

The acquisition must be approved by BrightPoint shareholders, a step that is likely to occur in the third quarter. The deal should close by the end of the year.

BrightPoint founder, chairman and CEO Robert J. Laikin, 48, would remain with the merged company in a senior advisory role to Ingram 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.

BrightPoint went public in April 1994.

As a child, Laikin dreamed of leading a public company and was among the city’s youngest chief executives at the time of the initial public offering.

He launched his first company, Tickets Up Front, while pursuing a business degree from Indiana University. He quit college to run the company, which launched in 1985.

An offshoot, Tickets and Travel, followed in 1986, which grew to become one of the city’s largest travel agencies.

But in the spring of 1986, a man walked into Laikin’s Landmark Center office and changed his life, Laikin recalled in an IBJ interview a decade later. Arnie Goldberg, a salesman for Hellyer Communications Inc., pulled out a 25-pound briefcase and showed Laikin an early-model cell phone.

“I got real excited about the product,” Laikin said then. “He let me use it for a few days, and I said I have to have one—because I was traveling all the time and always in different cities, and it was an exciting new product.”

That chance meeting ultimately led Laikin to launch Wholesale Cellular USA Inc., later renamed BrightPoint.

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  • Arlington,Tx Location
    So I wonder if they are planning to close down their Arlington,Tx location or shall I say wonder what their plans for it is....

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  1. I took Bruce's comments to highlight a glaring issue when it comes to a state's image, and therefore its overall branding. An example is Michigan vs. Indiana. Michigan has done an excellent job of following through on its branding strategy around "Pure Michigan", even down to the detail of the rest stops. Since a state's branding is often targeted to visitors, it makes sense that rest stops, being that point of first impression, should be significant. It is clear that Indiana doesn't care as much about the impression it gives visitors even though our branding as the Crossroads of America does place importance on travel. Bruce's point is quite logical and accurate.

  2. I appreciated the article. I guess I have become so accustomed to making my "pit stops" at places where I can ALSO get gasoline and something hot to eat, that I hardly even notice public rest stops anymore. That said, I do concur with the rationale that our rest stops (if we are to have them at all) can and should be both fiscally-responsible AND designed to make a positive impression about our state.

  3. I don't know about the rest of you but I only stop at these places for one reason, and it's not to picnic. I move trucks for dealers and have been to rest areas in most all 48 lower states. Some of ours need upgrading no doubt. Many states rest areas are much worse than ours. In the rest area on I-70 just past Richmond truckers have to hike about a quarter of a mile. When I stop I;m generally in a bit of a hurry. Convenience,not beauty, is a primary concern.

  4. Community Hospital is the only system to not have layoffs? That is not true. Because I was one of the people who was laid off from East. And all of the LPN's have been laid off. Just because their layoffs were not announced or done all together does not mean people did not lose their jobs. They cherry-picked people from departments one by one. But you add them all up and it's several hundred. And East has had a dramatic drop I in patient beds from 800 to around 125. I know because I worked there for 30 years.

  5. I have obtained my 6 gallon badge for my donation of A Positive blood. I'm sorry to hear that my donation was nothing but a profit center for the Indiana Blood Center.

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