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LOGICALIS ACQUIRES $90 MILLION IBM BUSINESS PARTNER STI

Logicalis, an international IT integration company and one of HP's largest Unix and storage solution providers, announced that it has acquired Solution Technology Inc (STI), a privately held IBM solution provider and one of IBM's top 10 Business Partners. Additionally, Logicalis has executed a letter of intent to purchase a regional HP solution provider.

"Logicalis' goal is and has always been to dramatically grow our revenue through the acquisition of complementary and very successful integrators of our top product lines, which include HP, IBM, Cisco and EMC," said Mike Cox, Logicalis CEO. "Our acquisition of STI quickly takes us to a whole new level in our IBM sales and service capabilities, while our pending acquisition of an HP solution provider underscores our ongoing commitment and dedication to HP as well."

The key to growth in today's market is to serve the customer with the platforms that best meet the customer's needs. To do so, solution providers need to be balanced across their key offerings. After the STI acquisition, both HP and IBM will continue to be represented with the same emphasis the two independent organizations offered, tapping the combined sales and technical specialists of each organization.

Under the agreement, Logicalis will purchase STI, a $90 million IBM business partner. STI will operate as a subsidiary of Logicalis for the balance of the calendar year. During 2005, Logicalis will integrate the two companies, and establish distinctly focused, dedicated HP and IBM sales and technical divisions.

Following Logicalis' acquisition of STI, Logicalis Group has revenues approaching $400 million and over 750 employees worldwide; of that, Logicalis US generates revenues of nearly $300 million and has approximately 350 employees nationwide. The company's U.S. headquarters will remain in Bloomfield Hills, Mich. STI's consulting subsidiary, Mindgent, is not part of the acquisition and will remain an independent company. The vast majority of STI's employees will become part of Logicalis; associated staff reductions will only affect positions where there is a duplication of functions, affecting approximately 8 to 10 people over a 60- to 120-day timeframe. As such, the two companies expect a smooth transition for employees, customers and their vendor partners.

The executive team for the combined companies will include two STI executives, Jeff Teeter, who will become general manager and executive vice president of the IBM-focused division, and Kirk Zaranti, will become senior vice president of sales of the IBM-focused division.

"STI has built a solid reputation in the IBM marketplace and will bring a significant IBM customer base as well as more than 120 sales and technical certifications to the relationship. Combining that reputation with Logicalis' multi-vendor solutions will have an appreciably positive impact on our combined customer base," Teeter said. "I have every confidence that the acquisition will go well and that Logicalis has the expertise to manage the transition successfully."

Both Logicalis and STI are customers of Arrow Electronics Inc, Englewood, Colo., an enterprise distributor, and the new Logicalis will continue to purchase its wares through Arrow's Support Net (IBM-focused) and SBM (HP-focused) divisions.

"Together, the combined companies will offer a host of complementary solution and service offerings that will continue to satisfy existing customers and which we expect will provide inroads to new, incremental business as well," said Eric Williams, executive vice president of Arrow's Support Net Division.

"In the midst of various consolidations taking place among some of North America's largest solution providers, Arrow looks forward to continuing its strong partnership with the two companies and their management teams. STI is a significant force in the IBM community, and the acquisition will quickly grow Logicalis' share in the IBM market. I am equally pleased to see Logicalis' unwavering dedication to the HP platform as evidenced by its announcement of its pending acquisition of a regional HP integrator," said Joe Burke, vice president and general manager of enterprise computing solutions for Arrow's North American Computer Products group.

Logicalis expects to continue making acquisitions, purchasing additional solution provider organizations with complementary vendor lines that will strengthen its product and service offerings as well as its geographic presence throughout the United States.