(By Balaseshan) Tech Data Corp. (NASDAQ:TECD), a wholesale technology products distributor, said it has agreed to buy out Brightstar Corp.'s 50% interest in their joint venture Brightstar Europe Ltd. for $165.6 million in cash.
Tech Data, which expects to fund the acquisition with available cash, believes that full ownership of its European mobility business is in the long-term best interest of its shareholders.
The transaction is not expected to impact Tech Data's fiscal 2013 sales, gross profit or operating income. Upon completion of the transaction, Brightstar's portion of Brightstar Europe's operating performance, will be eliminated, resulting in an anticipated positive impact to fiscal 2013 earnings of Tech Data.
Tech Data expects to record an adjustment that decreases additional paid-in capital within shareholders' equity by about $92 million. The transaction is expected to be completed during Tech Data's third quarter of fiscal 2013.
In 2007, Tech Data and Brightstar formed the joint venture, which reported $1.8 billion sales in last year, to capitalize on the growing mobility and wireless device market in Europe.
Brightstar would use the proceeds from the transaction for investment, expansion, and general corporate purposes. Brightstar's book value will increase, as a result of the transaction, by about $92 million to about $675 million on a pro-forma basis as of March 31, 2012.
As part of the agreement, Brightstar Europe's handset protection & insurance and buy-back & trade-in customers would be transferred to, and serviced, by Brightstar. The agreement also provides certain employees at Brightstar Europe to join Brightstar's European operations.
TECD is trading up 0.19% at $47.53 on Wednesday. The stock has been trading between $38.21 and $59.29 for the past 52 weeks.