The head of the telecommunications wholesaler Komsa will also head the West Coast company in future.
(Photo: Komsa)
Dusseldorf Telecommunications wholesaler Komsa is merging with British competitor Westcoast. The company from Hartmannsdorf, Saxony, announced this on Friday. The complete takeover by West Coast will then take place by 2025. The Komsa founders Gunnar Grosse and Jürgen Unger successively sell their shares to the British and withdraw as shareholders.
As a first step, a joint company will be created at the beginning of next year, in which Komsa will hold 51 percent and Westcoast 49 percent – if the authorities agree. Together, the companies, which continue to operate independently, generate 5.5 billion euros with 2,200 employees. Komsa, the family company with the highest turnover from East Germany, recently had a turnover of 1.4 billion euros, West Coast 4.1 billion euros.
Komsa acquires electronic devices from manufacturers such as Apple or Samsung and resells them to large and small specialist dealers in Germany and Poland. The company also works with system houses that look after corporate customers.
There are several reasons for the merger, Komsa boss Pierre-Pascal Urbon explained in an interview with the Handelsblatt. First, the competitive situation has changed fundamentally as a result of the pandemic and the enormous spread of mobile working. “It won’t go away,” Urbon said.
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The result: Telecommunications and IT are growing together in companies. “We talked about this for ten years, but that fundamentally changes the logic of the industry,” said the Komsa boss. More and more companies are also using Microsoft Teams for mobile communication. The company laptops must therefore be networked with the mobile phones. The step at Komsa from a dealer to a service provider is being pushed forward in this way.
Komsa’s share of sales with system houses is 250 to 300 million euros, and Komsa generates around 1.1 billion euros with around 20,000 specialist dealers.
Internationalization as a necessary step
In addition, geopolitics are playing an increasingly important role. “Previously people always thought globally, today it is important that the telecommunications and cloud services come from Europe,” explained Urbon. While Komsa specializes in telecommunications and also offers rental and operation of smartphones for companies, West Coast has long been involved with cloud services.
Both companies face competition from much larger US corporations such as Ingram Micro with annual sales of $55 billion and TD Synnex with sales of $38 billion. Urbon sees Komsa in a good position and as one of the market leaders in this country, opening up the German West Coast market. “But some of the mobile phone manufacturers and technology partners won’t do business with us if we’re not positioned in Europe,” he says.
That’s why – without an investment bank, as Urbon emphasizes – they were looking for a partner “so as not to run the risk of Komsa being marginalized by these trends”. With the merger, the company will achieve the necessary internationalization in Europe. Westcoast is active in France and Ireland, Komsa also in Poland.
The British company was founded by Joe Hemani 40 years ago and is still family-owned. The Brit hands over the top post to Komsa boss Urbon, who then manages both companies in one person.
The currently high energy costs and the high inflation as a result of Russia’s war of aggression in the Ukraine made things difficult for Komsa customers, i.e. the dealers. “That’s why they want to work with wholesalers who can finance the storage.” And Komsa can do that thanks to the equity ratio of more than 20 percent, which is high for the retail industry. By issuing a bonded loan and the associated investment grade rating, they have the financial stability to do so.
In addition, the founders Gunnar Grosse and Jürgen Unger arrange their successor with the gradual sale. Both will leave the supervisory board with the merger, while Grosse’s wife, Kerstin Grosse, will remain head of the supervisory board.
More: How Komsa became the largest East German family business