PC Products Distributor Acquires Canadian Firm

Micro D, the nation’s largest wholesale distributor of personal computer products, has taken its first step into foreign markets by acquiring a Canadian distribution company.

Micro D said Tuesday that it acquired Frantek Computer Products of Ottawa, Ontario, a wholesale distributor of personal computer equipment and software. The price was not disclosed. Frantek had sales of $10.1 million (Canadian) for the 10-month period ended Feb. 27.

Frantek “will provide Micro D with a strategic platform for entering the Canadian marketplace,” said Micro D Chairman Linwood A. (Chip) Lacy.

The Frantek acquisition is part of an expansion strategy unveiled by Lacy last year. The Santa Ana company recently completed a $25-million financing arrangement with Massachusetts Mutual Life Insurance Co. of Springfield, Mass., and Principal Casualty Insurance Co. of Des Moines, Iowa, which provided money for acquisitions.

Robert Anastasi, a technology analyst with the Atlanta-based investment firm of Robinson Humphrey, called the acquisition “a good move.”.

Profit Up 82%

“If Micro D’s formula worked in the United States, it should work in Canada,” he said.

Micro D, taking advantage of a resurgent personal computer industry and consolidation in the wholesale computer distribution business, saw its sales surge 59% to $352.5 million in 1987. The company, which distributes equipment and software for IBM and Apple Computers, reported earnings that rose 82% to $5.5 million.

Robinson Humphrey projects that Micro D’s sales will grow 26% to about $445 million in 1988. That estimate was made before the acquisition of Frantek.

Frantek was founded in 1982 as a regional software distributor. In recent years, Frantek has become a national distributor in Canada of both software and hardware.

Micro D said that Frantek’s president, Michael Anderson, will continue in that position.

By acquiring Frantek, Micro D “is playing catch up” with competitor AGS Computers’ Micro America unit, which recently made a move into the Canadian market, Anastasi said.

Anastasi expects Micro D and other leading microcomputer product distributors to increasingly expand into foreign markets during the next five years.