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ScanSource to divest non-digital business

ScanSource has initiated plans to sell certain businesses outside of the United States, Canada and Brazil.

“After considering our strategic options, we decided that the Planned Divestitures would offer opportunities to accelerate our profitable growth and cash flow,” said Mike Baur, Chairman and CEO, ScanSource, Inc. “These actions will enable us to focus our investments on our higher-growth and higher-margin businesses in the United States, Canada and Brazil, as well as our digital businesses globally. This will give investors increased insight into our long-term growth opportunities.”

The Planned Divestitures, comprised of nondigital distribution businesses in Europe, UK, Mexico, Colombia, Chile, Peru and the Miami-based export operations, had net sales of $623 million for fiscal year 2019 and at June 30, 2019 had working capital of $205 million. ScanSource currently has approximately 490 employees in these geographies and will communicate regularly with its employees on the sales process. There is no assurance that this sale process will result in a transaction or the timing of such transaction.

Shares in ScanSource have dropped 7.5% upon the news.

On the latest earnings call, August 20th, Mike Baur, Chairman and Chief Executive Officer said, “ScanSource will continue to operate and invest in its digital distribution business in these geographies including its recent acquisitions in intY, Canpango and Intelisys Global. We determined that we need a certain amount of scale to maximize our value-added model, and this led to the focus on Brazil, Canada, and the United States for our physical product distribution business. These actions are positioning us for faster-than-market growth for fiscal year 2020, and we are expecting 5% to 7% annual net sales growth in our fiscal year 2020 plan.”

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David Dungay

Editor - Comms Business Magazine