Micro D Enters World Market by Buying Canadian Firm

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

Santa Ana-based Micro D said Tuesday that it has acquired Frantek Computer Products of Ottawa, Ontario, a wholesale distributor of software and hardware microcomputer products. Frantek had sales of $10.1 million for the 10-month period ended Feb. 27.

Terms of the acquisition were not disclosed.

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 international expansion strategy unveiled by Lacy last year. The firm 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.

“It’s a good move,” Robert Anastasi, a technology analyst with the Atlanta-based investment firm of Robinson Humphrey, said of the acquisition. “If Micro D’s formula worked in the United States, it should work in Canada.”

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’s earnings 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.

Micro D distributes hardware, software and accessories for IBM and Apple computers, and is one of Orange County’s largest high-technology companies.

Frantek was founded in 1982 as a regional distributor of software products. In recent years, the firm 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. Frantek “will remain a Canadian operation and will continue to be managed by Canadian nationals,” the company said.

By acquiring Frantek, Micro D “is playing catch-up” with competitor AGS Computers Inc.’s 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.