Debt-laden HNA Group Co. will sell Ingram Micro Inc. for about $7.2 billion, representing the biggest asset sale for a company that had one of the biggest corporate downfalls in Chinese history.
U.S. private equity firm Platinum Equity signed a definitive agreement to acquire the closely held technology distribution company from a Shanghai-listed HNA unit, according to a Wednesday statement that confirmed an earlier Bloomberg News report. The sale is expected to be completed by the first half of 2021.
For HNA, which is now effectively controlled by the Hainan provincial government, the deal represents the biggest transaction in a deleveraging campaign that began about three years ago and resulted in tens of billions of dollars worth of asset sales. The Chinese conglomerate bought Ingram Micro in 2016 at a time it was paying top dollar for everything from ultra-luxury real estate to top shareholdings in firms such as Deutsche Bank AG.
HNA Technology Co., the unit selling Ingram Micro, climbed as much as 7% on Thursday in Shanghai, their largest move since September. The stock is up about 9% this year.
HNA, which has been selling assets to focus on its aviation roots, made a solid return on the investment and the change in ownership helps ensure that Ingram Micro can continue its growth trajectory, a spokesperson for the Chinese group said.
Most importantly for HNA, the sale helps bring relief to its ongoing liquidity challenges. HNA Technology said in an exchange filing earlier this month that it’s in talks with banks about the payment of $1.35 billion in loans that are past due. The company hasn’t paid off any of them, which are part of a $4 billion syndicated loan used to finance the acquisition of Ingram Micro, the filing showed.
During its empire-building days, HNA was the most prominent of several conglomerates — the others including Dalian Wanda Group Co. and Anbang Insurance Group Co. — that made a splash internationally from near obscurity. Then the Chinese government began cracking down after authorities grew wary of the debt they were amassing and of the capital outflow caused. Wanda has since retreated from its Hollywood ambitions and Anbang’s business was seized by the government.
Though HNA, Wanda and Anbang rarely make the news nowadays, a new crop of ambitious conglomerates such as China Evergrande Group and Tsinghua Unigroup Co. have stood out in recent months because of their struggles with debts.
The Ingram Micro sale is subject to the approval of HNA Technology shareholders and regulatory clearance, according to Wednesday’s statement. Ingram Micro Chief Executive Officer Alain Monie will stay in his role after the transaction closes, and the company’s headquarters will remain in Irvine, California.
Los Angeles-based Platinum is run by Tom Gores, who has an estimated net worth of about $5.1 billion, according to the Bloomberg Billionaires Index. Ingram Micro would be among the largest-ever deals for the firm, which has about $23 billion of assets under management, according to its website.
The deal also ranks as this year’s biggest disposal by a Chinese company to an overseas buyer, according to data compiled by Bloomberg. The transaction caps months of negotiations between Platinum and HNA, which Bloomberg News first reported in August.
Ingram Micro, which traces its roots back to 1979, offers technology and supply chain services. It has more than 35,000 employees and operations in 60 countries providing solutions in areas such as cloud, mobility and enterprise computing.
Morgan Stanley and Goldman Sachs Group Inc. advised Platinum on the deal. The private equity firm has debt financing commitments from JPMorgan Chase & Co., Bank of America Corp. and Morgan Stanley. JPMorgan worked with HNA on the sale.
