*Berbee provides a scalable platform for CDW to grow its solutions and services capabilities
*Transaction is consistent with CDW’s strategies to expand its customer base, capture a greater share of its customers’ IT spending and increase its addressable market
*Accretive impact to EPS in 2007
VERNON HILLS, Ill.–September 18, 2006–CDW Corporation (NASDAQ:CDWC), a leading provider of technology products and services to business, government and education, today announced that it has signed a definitive agreement to acquire privately-held Berbee Information Networks Corporation (“Berbee”), one of the nation’s largest independent IT solution providers, for approximately $175 million in cash. This acquisition will enhance CDW’s offerings of advanced technology products and services to address customers’ more complex business requirements. In addition, the acquisition is consistent with CDW’s strategies to expand its customer base, capture a greater share of its customers’ IT spending and increase its addressable market. CDW expects the transaction to be accretive to 2007 earnings by approximately $0.05 per diluted share. The acquisition is expected to close by the end of October, subject to certain customary closing conditions including Hart-Scott-Rodino regulatory clearance.
“Our customers’ IT challenges are increasingly complex–customers want easy access to technology solutions,” said John A. Edwardson, CDW chairman and chief executive officer. “We are committed to being the best-in-class, single source for both core technology needs–and now with this acquisition, more advanced IT services and solutions.”
Berbee has an established track record of growth and profitability through the delivery of category-leading services and IT products primarily across the Cisco, IBM and Microsoft platforms. Founded in 1993, Berbee is a proven partner to a broad spectrum of customers including corporate, healthcare, education and state and local governments. Berbee provides world-class solutions and engineering capabilities in advanced technologies. Areas of expertise include network infrastructure and unified communications, systems and storage, security, productivity applications and managed services. Berbee is a national gold certified partner with Cisco, a premier business partner with IBM authorized to sell all IBM server and storage lines and has six Microsoft gold certifications. Berbee received recognition as Cisco’s U.S. IP Communications Partner of the Year in 2005, an IBM Beacon Award for Best IBM iSeries On Demand Solution in 2006 and Microsoft Central Region Partner of the Year in 2006.
For the trailing 12 months ended July 31, 2006, Berbee’s revenue was $390 million and earnings before interest, taxes, depreciation and amortization was $22 million. Berbee has consistently grown revenue at strong double-digit rates for the past five years. CDW’s objective is to double Berbee’s revenue in five years on an organic basis. As part of the transaction, Berbee’s top three executive officers, including Chief Executive Officer Paul S. Shain, have agreed to remain with and lead the business. Berbee will operate as a separate strategic business unit of CDW with its current product and service offerings, management team, staffing, operations and locations. Based in Madison, Wisconsin, Berbee has 11 offices and two data centers in six Midwestern states and employs approximately 800 people. “CDW and Berbee have a strong common bond – we are both industry leaders that focus on empowering coworkers and providing a superior experience for our customers. We are confident that our shared cultural values will enable our two organizations to succeed together,” said Edwardson.
While CDW and Berbee’s business models are different, they are highly complementary. CDW is focused on a diverse product selection from a wide variety of vendors, rapid order fulfillment and value added services “around the box.” The sales model is primarily inside based with dedicated account managers serving customers supported by technical specialists and field teams. In comparison, Berbee incorporates both product and service sales by offering advanced IT solutions from three primary partners, Cisco, IBM and Microsoft. Services are provided by a team of more than 300 billable engineers working at customer locations. Berbee’s sales model is primarily a field sales force working out of 11 branch offices.
“For CDW, this strategic transaction supports our vision of becoming the world’s biggest and best direct technology provider. Berbee’s proven ability to grow organically, make accretive acquisitions and develop scalable business processes offer us additional growth opportunities,” said Edwardson.
The acquisition is consistent with several CDW growth strategies, including:
*Expand the customer base: Approximately two-thirds of Berbee’s customers are currently not CDW customers. The companies’ complementary offerings will create significant cross-selling opportunities.
*Capture a greater share of customers’ IT spending: The acquisition will accelerate CDW’s solutions capabilities.
*Increase the addressable market: The transaction will expand CDW’s portfolio to include higher-end products and services.
“Initially, CDW customers in Wisconsin, Illinois, Minnesota, Michigan, Indiana and Ohio will benefit from gaining access to one of the nation’s finest IT engineering teams,” said Edwardson. “In addition to the near-term advantages of this transaction, we are also excited about the opportunities to scale Berbee’s business processes and methodology into geographic regions beyond the Midwest. Our financial, customer and organizational resources support this platform for future growth.”
Berbee Chairman and Founder James G. Berbee said, “It’s very gratifying to know that as Berbee moves onto an increasingly national stage it will have a premier industry partner with the resources, cultural values and commitment to support its growth as a leading national solutions provider. I want to thank the Berbee staff members for their dedication and hard work in consistently exceeding our customers’ expectations, building the premier IT solutions provider in the nation and making this Combination possible. They have a bright future with CDW.”
Berbee Chief Executive Officer Paul S. Shain said, “Today marks an important milestone for both Berbee and CDW. Industry consolidation will increasingly reshape the solutions provider marketplace. Once again, we’re leading rather than following key changes in the industry, just as CDW has done many times before. We’re fortunate to be able to partner with an industry leader that is financially strong and shares our commitment to advanced technology, extraordinary customer service and similar cultural values. We’re confident that CDW is the right partner for the Berbee team.”
CDW will host a conference call today, September 18, 2006 at 8:30 a.m. ET / 7:30 a.m. CT to discuss this acquisition. The call-in number is 1-800-685-9697 (or 847-619-6797) and the confirmation number is 15761279. A replay will be accessible by telephone through October 6, 2006 by dialing 1-888-843-8996 (or 630-652-3044), and the confirmation number is 15761279. The replay will be available 24 hours/day, including weekends.
Berbee was advised on the transaction by Piper Jaffray & Co.
Forward Looking Statement
Any forward-looking statements contained in this release are based on the Company’s beliefs and expectations as of the date of this release and are subject to certain risks and uncertainties, including with respect to the completion of the transaction, which may have a significant impact on the Company’s business, operating results or financial condition. Should any risk or uncertainty materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described in forward-looking statements. Factors affecting the Company’s business and prospects are discussed in the Company’s filings with the Securities and Exchange Commission.
About Berbee Information Networks Corporation
Berbee Information Networks Corporation is one of the nation’s largest independent providers of IT solutions to a broad spectrum of clients. More than half of the company’s revenue is generated from enterprise class customers that include some of the nation’s best known corporations. Berbee’s areas of expertise include network infrastructure and unified communications, systems and storage, security, productivity applications and managed services. Known for its world-class engineering and proven service excellence in advanced IT technologies, Berbee has achieved high levels of certification concurrently with its key vendor partners. Berbee is a national gold certified partner with Cisco, a premier business partner with IBM authorized to sell all IBM server and storage lines and has six Microsoft gold certifications.
Founded in 1993 by Jim Berbee, a former IBM systems engineer, the company was formed to provide a high level of services to clients in need of networking and mid-range server technologies and, in the ensuing 13 years, has grown to become a leading IT solutions provider in the Midwest including Wisconsin, Illinois, Minnesota, Michigan, Indiana and Ohio.
CDW®, ranked No. 343 on the FORTUNE 500, is a leading provider of technology solutions for business, government and education. CDW is a principal source of technology products and services including top name brands such as Acer, Adobe, Apple, Cisco, HP, IBM, Lenovo, Microsoft, Panasonic, Samsung, Sony, Symantec, Toshiba and ViewSonic.
CDW was founded in 1984 and employs approximately 4,450 coworkers. In 2005, the company generated sales of $6.3 billion. CDW’s direct model offers one-on-one relationships with knowledgeable account managers; purchasing by telephone, fax, the company’s award-winning CDW.com web site, customized CDW@work” extranets, CDWG.com web site and macwarehouse.com web site; custom configured solutions and same day shipping; and pre- and post-sales technical support, with approximately 120 factory-trained and A+ certified technicians on staff.