Ingram Micro President: Unlike Competitors, We Won't Be Distracted By Mergers Or Cost-Cutting

Ingram Micro President Paul Bay said partners can still sell to the U.S. government after the HNA deal closes, and unlike Tech Data and Avnet, Ingram won't be saddled with a big integration or cost-cutting project.

"We're not going to be distracted by going through a merger, or trying to take out hundreds of millions of dollars of costs with a consolidation," Bay told partners in a keynote address Tuesday at Ingram Micro ONE. "While other distributors may be merging, splitting or reorganizing, we're going to continue to invest in making sure we serve you to be that indispensable business partner.

Ingram Micro rival Tech Data has said it will cut $100 million of costs in the two years after its $2.6 billion acquisition of Avnet Technology Solutions closes, much of which will come from combining the SAP systems run by each distributor into a common platform.

[RELATED: Former CIA Director Says The Private Sector, Not the Government, Will Protect Us From Cyberthreats]

Tech Data declined to respond to Bay's comment, though CEO Bob Dutkowsky told Wall Street analysts last week that the distributor has separate teams handling ongoing business and the integration process and hasn't become overly distracted by the Avnet acquisition.

Bay told more than 2,000 people at the Aria Resort & Casino in Las Vegas that receiving U.S. antitrust approval for the sale of Ingram Micro to Chinese logistics firm Tianjin Tianhai was "one of the most intense vetting processes" that he's ever been through.

As part of the Committee on Foreign Investment in the United States (CFIUS) process, Bay said he had to travel to Washington D.C. and sit down with officials from nine U.S. government agencies - including the departments of State, Justice, Homeland Security, Commerce, Treasury and Defense - and discuss the potential national security impact of the Tianjin Tianhai acquisition.

U.S. antitrust officials have grown increasingly wary in recent years of Chinese ownership of U.S. technology assets, with Chinese-backed acquisitions of Western Digital, Fairchild Semiconductor, Phillips and Micron all scuttled in the past year due in part to CFIUS-related concerns. But the Ingram Micro deal is slightly different since it won't result in any intellectual property ending up in Chinese hands.

Bay said it was important for U.S. security agencies to understand the business Ingram Micro does with the federal government through its solution provider partners. Ingram Micro and Promark -- a public sector-focused subsidiary acquired by Ingram in 2012 -- do not hold contracts or sell products through its General Services Administration schedule that require a security clearance.

CFIUS cleared the transaction on Oct. 31, and the $6 billion acquisition is expected to be complete by the end of the year.

"If the government's feeling good about what we're doing with all of you and they've approved this after an intense vetting process, then all of you should feel comfortable as you transact with the government through Ingram Micro," Bay said.

Once the deal closes, Ingram Micro will become part of the HNA Group, a Chinese conglomerate that owns other transportation and shipping entities such as Hainan Airlines, China's fourth-largest airline.

"Our acquisition is a huge example of this industry changing, but it's continuing to prepare us for the evolution of our collective business together," Bay said.

Ingram Micro will continue making "bold moves" after the acquisition closes, Bay said, leveraging HNA's deep pockets to take a long-term view of the market and making moves that will benefit partners even if there's no immediate payoff for Ingram Micro.

Bay reiterated that Ingram Micro's strategy will not change once it becomes part of HNA, and partners will continue doing business with the same people they work with today.

"Not only are you going to have what is a $43 billion business behind you worldwide from Ingram Micro, now there's going to be a $100 billion business standing behind you [in HNA Group]," Bay said. "We're going to take it to the next level."

The acquisition will be a great move if HNA allows Ingram Micro to continue running the way it's accustomed to, said Eric Nilson, data center manager at Chicago-based SingleHop. Having the backing of a multinational conglomerate will allow Ingram Micro to expand its footprint, reach different markets and invest more in research and development, Nilson said.

"It's just that much more leverage you have when you have that support," Nilson said.

Ingram Micro has been more aggressive in its pricing and responsive to customer queries since the HNA deal was announced in February, said Yves Boissonneault, president of Sherbrooke, Quebec-based Informatique Inpro. Boissonneault works with both Tech Data and Ingram Micro, and while he backs the recent deals made by both distributors, he doesn't want to see industry consolidation go too far.

"They're large companies," Boissonneault said. "We are a small business."