Brightpoint Transaction

9 Months Ended

Sep. 30, 2012

Note 3. Brightpoint Transaction

April 2011 Transaction

On April 19, 2011 (the “Transaction Date”), the Company and two of its subsidiaries, Intcomex Colombia LTDA (“Intcomex Colombia”) and Intcomex de Guatemala, S.A., (“Intcomex Guatemala”) completed an investment agreement (the “Brightpoint Transaction”) with two subsidiaries of Brightpoint, Inc., Brightpoint Latin America and Brightpoint International Ltd (collectively herein referred to as “Brightpoint”). Pursuant to such agreement, the Company issued an aggregate 38,769 shares of its Common Stock to Brightpoint Latin America. Effectively, the Brightpoint Transaction was comprised of two transactions: (1) the sale of 25,846 shares of Common Stock for $15,000 in cash; and, (2) the acquisition of certain assets and liabilities of the Brightpoint Latin America operations and the equity associated with its operations in Colombia and Guatemala (collectively herein referred to as the “Brightpoint Latin America Operations”), in exchange for 12,923 shares of Common Stock valued at $7,500 plus $174 cash, net, at closing.

Additionally, the acquisition of the Brightpoint Latin America Operations provided for a post-closing working capital adjustment to be settled in cash. In September 2011, together with Brightpoint, the Company finalized the working capital adjustment resulting in an additional payable by Brightpoint to the Company of $871, which the Company received in October 2011. The Company included the financial results of Brightpoint in its consolidated financial statements from the Transaction Date. These results were not material to the Company’s consolidated financial statements.

For the nine months ended September 30, 2011, the cash flows from the transaction have been presented in the consolidated statement of cash flows as $15,000 received on issuance of Common Stock in cash flows from financing activities and $174 net, paid on acquisition of business in cash flows from investing activities.

The Company engaged independent valuation experts to assist in the determination of the fair value of the assets and liabilities acquired in the Brightpoint Transaction. Goodwill has been allocated, with $2,673 allocated to the Miami Operations and $1,679 allocated to the In-country Operations in Guatemala and Colombia. The total transaction value was approximately $22,674, consisting of the following:

Transactional Values in the Brightpoint Transaction:


Fair value of common stock sold for cash	$	15,000
Fair value of total consideration transferred for acquisition of Brightpoint Latin America Operations	$	7,674

Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed at Acquisition:

In allocating the total purchase price based on estimated fair values, the Company recognized amounts of assets acquired and liabilities assumed of the Brightpoint Latin America Operations, consisting of the following:


	Amounts Recognized as of Transaction Date (Provisional)^{( 1)}		Adjustments			Final Allocation
Assets acquired:
Current assets
Cash	$	—	$	—		$	—
Accounts receivable		938		(27	)		911
Inventories		6,953		(98	)		6,855
Prepaid expenses and other		116		1,161	⁽²⁾		1,277	⁽²⁾

Total current assets		8,007		1,036			9,043
Fixed assets		—		204			204
Goodwill		—		4,352			4,352
Intangible assets		6,937		(5,509	)		1,428

Total assets acquired	$	14,944	$	83		$	15,027

Liabilities assumed:
Current liabilities
Accounts payable	$	5,789	$	(66	)	$	5,723
Accrued expense		1,481		149			1,630

Total liabilities assumed		7,270		83			7,353

Net assets acquired	$	7,674	$	—		$	7,674

Consideration:
Equity	$	7,500	$	—		$	7,500
Cash paid at closing, net		174		—			174

Total consideration	$	7,674	$	—		$	7,674

(1)	As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011.

(2)	Includes $871 working capital adjustment due from Brightpoint; collected in October 2011.

The purchase price allocation for the Brightpoint Transaction was based upon the Company’s calculations, valuation, estimates and assumptions. The Brightpoint Transaction is not material for the pro-forma disclosure in the notes to condensed consolidated financial statements (unaudited).

June 2012 Transaction

On June 29, 2012, in a separate transaction related to Brightpoint entering into a merger agreement with a global IT wholesale distributor and after the end of the one year measurement period, the Company entered into an agreement with Brightpoint to, among other things, eliminate the mutual non-competition covenants included in the purchase agreement dated March 16, 2011 underlying the Brightpoint Transaction and the Company’s shareholders’ agreement, and terminate the license agreement dated April 19, 2011 (the “License Agreement”) with immediate effect, provided that the Company retained the right to use the Brightpoint names and logos as set forth in the License Agreement in accordance with its terms for a period of 90 days from June 29, 2012. Additionally, Brightpoint agreed to pay $5,000 to the Company, which was collected during July 2012. As a result of this transaction, the Company recognized a gain of $4,285, which was recorded in other income in the unaudited, condensed consolidated statement of operations and comprehensive income (loss).

On June 29, 2012, the Company entered into a separate agreement with Brightpoint pursuant to which Brightpoint granted to the Company an option to purchase the Company’s 38,769 shares of common stock held by Brightpoint for $3,000, less any dividends paid on such shares to Brightpoint. The option became exercisable upon the closing of a change of control of Brightpoint on October 15, 2012, and is exercisable for five years from the date of that event. The Company is currently precluded from exercising the option pursuant to the terms of the indenture governing the Company’s 13¹/4% Senior Notes.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

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+ Details

Intcomex, Inc. 10-Q