MicroWarehouse, parent company of MacWarehouse filed for Chapter 11 bankruptcy protection yesterday in the US.
The company lists assets of over $100 million and debts of more than $100 million. The company announced agreement September 8 that it would sell its assets at a cost of $22 million to US independent direct seller of computers and software CDW (NASDAQ: CDWC). CDW takes MicroWarehouse's US and Canadian operations.
Distributor Ingram Micro is listed as the company's biggest unsecured creditor in papers filed with the court – Ingram Micro is owed $17.9 million.
MicroWarehouse enjoys annual worldwide sales of $1.9 billion worldwide, with US customers accounting for $900 million of sales. The deal makes CDW the leading Mac distributor in the US.
"We believe that more than 75 per cent of MicroWarehouse's corporate and public sector revenue is from customers who are new to CDW," CDW CEO John Edwardson told Reuters.
CDW will not take on MacWarehouse's liabilities, but will take a five per cent fee for collecting money due to the company. CDW expects the transaction to result in $10-12 million in costs – including severance – in the fourth quarter.
The news means the company's customers worldwide should not face any problems completing their orders.
MacWarehouse has been led by Jerome York, who also serves on the boards of Apple Computer and MGM'.
York said: "The loyal customers of Micro Warehouse deserve the best service and this combination of resources is the best way to provide it to them. By leveraging CDW's strong financial position, excellent logistics capabilities and world-class sales and sales management team, the potential of the acquired US and Canadian assets of Micro Warehouse will be unlocked."
The impact of the acquisition on MicroWarehouse's European customers is complex. The company's UK managing director Nigel Foxwell told Macworld: "In Europe, it's business as usual – we're still recruiting, and we are looking forward to continuing to serve our customers."
The European situation is as follows: MicroWarehouse has sold its US and Canadian assets to CDW. It retains its 100 per cent ownership of MicroWarehouse BV, the European umbrella company that itself owns 100 per cent of the four MicroWarehouse business units in Europe, in the UK, Germany, France and Italy. The parent company in the US is now looking to sell its interest in the European units, Foxwell confirmed.
"The UK business has no assets pledged to the US. We are profitable and continue to do business as normal," he told Macworld. "We have a strong balance sheet," he said.
On the parent company's plans to sell its European interests, Foswell said: "I'm not expecting any sale for a couple of months, the US needs time to complete the exchange with CDW." He predicted the eventual buyer would be a major player in the computer market.
"MicroWarehouse customers continue to be supported worldwide by CDW in North America and by MicroWarehouse in Europe," Foswell said.
CDW is hosting a webcast of CDW's management discussion looking at the acquisition until September 30.