Acquisition of Intersmart Comércio, Importação e Exportação de Equipamentos Eletrônicos S.A. ("Network1")

Demarest advised ScanSource Inc. in the acquisition (through its subsidiary in Brazil, CDC Brasil Distribuidora de Tecnologias Especiais Ltda.) of 100% of Intersmart Comércio, Importação e Exportação de Equipamentos Eletrônicos S.A. ("Network1"), for BRL 156,928,000 plus earn-out payments based on EBITA over the next four years.

 ScanSource, Inc. ("ScanSource"), the leading international value-added distributor of specialty technology products, founded in 1992, and ranked #751 on the Fortune 1000, through its subsidiary in Brazil, CDC Brasil Distribuidora de Tecnologias Especiais Ltda., has acquired one hundred per cent of Intersmart Comércio, Importação e Exportação de Equipamentos Eletrônicos S.A. (“Network1”). 

Network1 is one of Brazil’s leading value-added distributors with a strong offering of communications equipment and services, and has operations in other countries over Latin America, such as Mexico, Colombia, Chile and Peru. 

Network1 net sales for calendar year 2014, on a U.S. GAAP-adjusted basis, are estimated at approximately R$720 million (approximately US$306 million, using the average foreign exchange rate for 2014) with operating margins consistent with ScanSource’s Communications business. Network1 has over 60 vendors, 8,000 customers, and nearly 400 employees.

The purchase of Network1 enables ScanSource to expand its worldwide communications business into Latin America, providing resellers access to the industry’s leading vendors. As a value-added distributor serving the reseller community, Network1 is committed to providing the services and support resellers need, such as highly trained pre-sales specialists; an Authorized Training Center, which delivers comprehensive classroom and online education; specialized marketing solutions; dedicated technical support; an advisory portal, providing solution, application and product information, in addition to a virtual store; and exceptional logistics. The acquisition of Network1 will complement ScanSource’s existing successful point-of-sale and barcode business in Brazil. 

ScanSource's geographic reach in Brazil will be greatly expanded, adding locations in Goiás, Pernambuco and Espírito Santo, in addition to ScanSource’s established locations in São Paulo, Paraná, Santa Catarina and Ceará. This expansion provides resellers with even greater access to ScanSource’s robust product offering, value-added services and exceptional support.

Lead partner from Demarest: Paulo Frank Coelho Rocha - M&A partner, and Carolina Taunay Joop - M&A senior associate

All the Demarest's lawyers involved:

Oswaldo Leite de Moraes Filho - WTO/Trade partner

Eloisa de Almeida Rego Barros Curi - Tax partner

Henrique Januário Soares Melo - Labor senior associate

Carlos Eduardo Marino Orsolon - senior associate, Tax senior associate

Cassiano Inserra Bernini - senior associate, Tax senior associate

Victor Bovarotti Lopes - senior associate, Trade senior associate

Alexandre Ponce de Almeida Insfran - Social Security associate

Max Ide Hasimoto - M&A associate

Other law firms involved:

Derraik & Menezes advised the sellers

Financial and other advisers

PWC assisted ScanSource

EY assisted Network 1

The following firms also acted for Scansource in the transaction, under the coordination of Demarest Advogados:

Estudio Olaechia - Peru

Basham Abogados - México

Claro & Cia  - Chile

Brigard & Urrutia - Colombia

Relevant jurisdictions (if cross border)

Brazil, Mexico, Colombia, Chile, Peru and USA

Governing law

Laws of the State of Delaware, United States of America

Jurisdiction for dispute resolution

Arbitration Rules of the International Chamber of Commerce.