PCM paid $14 million in cash for selected business-to-business assets from Systemax’s North American Technology Group (NATG), including the TigerDirect brand. The deal closed on December 1, 2015. It was not a purchase of all of Systemax’s North American technology business, its inventory, or its consumer customer list.
What did PCM buy from Systemax, and what did the TigerDirect brand have to do with the deal?
PCM and Systemax announced a definitive agreement on November 18, 2015. Under the agreement, PCM acquired selected NATG assets for $14 million in cash. PCM later described the completed transaction in its 2015 Form 10-K as the acquisition of “certain Business to Business (B2B) assets” of NATG. PCM’s 2015 Form 10-K records that the deal closed December 1, 2015.
The TigerDirect brand was part of the acquired intellectual property. The package also included the right to hire approximately 400 B2B sales representatives in the United States and Canada, NATG’s B2B customer list, selected B2B customer and vendor contracts, other intellectual property, and certain fixed assets and equipment. The filing’s transaction description identifies these as selected assets, not an acquisition of all Systemax operations.
What was excluded or handled separately?
The $14 million price did not buy the full set of NATG assets. Systemax retained cash, accounts receivable, inventory, and trade payables. The customer information included in the core transaction was the B2B list, not the consumer customer list.
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Consumer customer information was covered by a separate, one-year option for PCM to acquire it for $500,000, as disclosed in Systemax’s closing filing. That separate option should not be confused with the B2B customer-list transfer or treated as part of the $14 million purchase price. Systemax’s closing filing describes the option.
| Asset or item | How the deal treated it |
|---|---|
| TigerDirect brand and other intellectual property | Included among the acquired assets. |
| B2B customer list and selected B2B contracts | Included in the acquired package. |
| Consumer customer information | Not part of the core transfer; subject to a separate one-year option for $500,000, according to Systemax’s closing filing. |
| Cash, accounts receivable, inventory, and trade payables | Excluded from the transaction. |
| Certain IT, website, and related assets | Transferred during the transition; Systemax reported that delivery of certain assets was completed in February 2016. |
How did the transition work?
After the December closing, Systemax continued selling its remaining inventory while the businesses transitioned. The parties also arranged for additional assets, including B2B website assets and related domain names, to be transferred to PCM. Systemax later reported that delivery of certain IT, website, and related assets was completed in February 2016. Systemax’s 2015 annual report describes the transition and the wind-down of the remaining NATG operations.
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Why did Systemax sell the assets?
Systemax’s 2015 annual report describes difficult market conditions and poor operating performance. After adverse conditions in retail and online consumer operations, Systemax had decided to focus NATG primarily on B2B customers. It exited its retail-store business, explored strategic alternatives, sold selected assets to PCM, and wound down the remaining NATG operations. By the time it filed the annual report, Systemax treated NATG as discontinued. Systemax’s annual report gives the company’s account of those decisions.
What did the deal contribute to PCM at first?
PCM said TigerDirect’s sales contribution to the fourth quarter of 2015 was insignificant. That is a narrow statement about the quarter immediately around the acquisition, not evidence of the brand’s longer-term performance. PCM’s 2015 Form 10-K provides the contemporaneous characterization.
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What the historical filings do—and do not—establish
The SEC-filed materials document the 2015 sale and transition through 2016. They establish that the TigerDirect brand was included in PCM’s acquired assets at that time; they do not establish the brand’s current ownership, operation, or shopping availability.
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