It looks like the long-proposed merger between Cellnet and Dicker Data might finally have drawn to an unsuccessful conclusion at the end of last week.
It's had more twists and turns than an Olympic slalom course along the way, starting almost two years ago when then Cellnet managing director, Adam Davenport, flagged intentions to use a $50 million credit facility to go on a shopping spree.
His criteria focused on other distributors that could add volumes to existing vendor partnerships, provide complementary brand relationships or improve its geographical representation.
With more than half of its vendors already in the Cellnet stable (Canon, Epson, HP, LG and Toshiba), Dicker immediately looked like a prime target. It also carried NEC and Kingston, which fitted the bill as complementary brands and, although Brisbane-based Cellnet had a presence in NSW, Dicker would strengthen its position in that state beyond all recognition.
However, although negotiations took place, the proposed deal quickly fizzled out in August 2006 with the two parties unable to agree on terms.
In many circumstances, that would have been the end of that but it certainly wasn't the case here. Cellnet did manage to close a couple of acquisitions in the months ahead - flash memory specialist, VME Systems, and Adelaide-based HiTech Distribution - but neither was of the scope Davenport had hoped.
His strategy for concentrating on IT and developing Cellnet from its telco heritage into a true convergence distributor was floundering and, when results for the six months to December 2006 again failed to deliver a return on shareholder investment, Davenport was under severe pressure.
By May 2007, the share price had fallen from a high of $1.49 in January to $1.07 and Davenport tendered his resignation. He was replaced by CFO, Mark Bloomer, but he lasted less than three months and by August, co-founder Stephen Harrison was back in the hot seat.
Meanwhile, developments had not gone unnoticed back over at Dicker Data and managing director, David Dicker, noted in July 2007 that he was monitoring Cellnet's share price, which at the time stood at $0.93. Apple terminated its Cellnet contract in July, HP followed three months later and financial results continued to disappoint - the loss of those major vendors contributed heavily to a loss of more than $800,000 in the six months to December 31, 2007.
Dicker smelled blood and picked up the phone to Cellnet's major shareholder, CVC Ltd. It's not difficult to see why the deal was attractive - Dicker sales manager, Chris Price, has done an outstanding job since leaving his post as IBM manager at Ingram Micro a couple of years ago but has been unable to land either of the company's two major targets - HP printers and IBM servers. Buying Cellnet would have delivered the latter with Lenovo as a nice bonus.
However, after four months of trying to convince CVC to support his plans, Dicker's deal finally looks dead in the water. But anybody who's been working in this industry for a while knows all too well that you can never say never.
Brian Corrigan is the editorial director of ARN.