CDW heads north with Microwarehouse acquisition

CDW Inc. has bought some select assets of Microwarehouse Inc., including its Toronto operation, but the future of the Montreal office is up in the air.

Vernon Hills, Ill.-based CDW, one of the largest resellers in the U.S., has

agreed to pay US$22 million in cash for Microwarehouse’s American and Canadian operations, including US$14 million in inventory.

The purchase allows CDW to expand customer reach, particularly to the education market in the U.S., and open up a new territory in Canada.

“”We certainly would like to see growth in the Canadian market as we’ve seen in the U.S. market. This is our first entry into the Canadian market, so we will of course need to learn about it and continue to work to develop that marketplace,”” said CDW chief financial officer Barbara Klein.

The staff at the Toronto office of Microwarehouse Canada cater largely to the Canadian market. The company’s Montreal office focuses chiefly on U.S. sales. CDW passed on purchasing that part of Microwarehouse’s operations since it would duplicate the work done by CDW’s own American sales force.

Kevin Marr, a Toronto-based sales manager at Microwarehouse Canada, said that employees were assured Monday morning that their jobs were safe and wouldn’t be affected by the change in ownership.

Klein said that the transition process is underway and there are CDW executives in Toronto to “”learn more about it, but we certainly will be careful and deliberate with our evaluations.””

Montreal, however, is another story.

According to Marr, all calls to the Montreal office are being redirected to Toronto for the time being.

“”Montreal is on a two-day hiatus. On Wednesday, they’re going to announce what’s going to happen. They’ve basically shut it down for a couple of days,”” he said.

He added that there are 150 people working in Montreal that are dedicated to U.S. sales and only 11 working on Quebec customer accounts. “”I think what (they are saying) is, ‘Do we keep a division of Canada that really only sells into Canada for 11 people?’ That’s where it stands. Right now what we’re hearing is nothing official,”” he said.

Montreal’s fate may be undecided at this point, but the transition to CDW is a positive change for Toronto, according to Marr. Had CDW decided to expand into Canada under its own power, Microwarehouse may have been in for a bumpy ride.

“”I think my VP said it best. He said we could have just watched CDW come up here on their own and just kicked our ass. I think the whole reseller industry should be quaking in their boots with us out there with the sheer size of us now. CDW’s massive,”” he said.

There will be more product options now available to Microwarehouse under CDW, said Marr, like high margin storage hardware.

“”It opens a million options,”” he said. “”Warehousing: we get access to more of it. Purchasing: we have access to be more lines. Possibly better pricing. We don’t know yet.””

Microwarehouse is also a leading Apple reseller in North America. By adding Microwarehouse assets, CDW becomes the largest Apple distributor in the U.S., according to Klein.

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