CDW to Become Managed Services Powerhouse with $2.5 Billion Sirius Acquisition

CDW is shelling out $2.5 billion to acquire Sirius Computer Solutions. The deal will instantly make CDW a managed services powerhouse.

In past years, Sirius repeatedly topped the MSP 501, the world’s first, largest and most comprehensive survey and ranking list in the IT channel.

The acquisition accelerates CDW’s service and solutions capabilities. Moreover, it will enhance capabilities in key growth areas. Those include hybrid infrastructure, security, digital and data innovation, cloud and managed services.

In addition, it will increase opportunities to deepen customer relationships and expand customer reach.

Combining with Sirius will expand CDW’s services portfolio by about 45%, from about $900 million in annual net sales in 2020 to about $1.3 billion in combined annual net sales. Expect the increased mix of services to further balance and diversify CDW’s portfolio mix with bigger profit.

CDW and Sirius should close the acquisition in December pending regulatory approvals and other closing conditions.

Accelerating CDW’s Growth Strategy

Christine Leahy is CDW’s president and CEO. She said customers are requiring increasingly complex and critical digital transformation initiatives. And Sirius’ broad portfolio of solutions and services-led approach will immediately add to CDW’s capabilities to meet this demand.

“Combining our businesses will accelerate progress on our three-part growth strategy by augmenting our portfolio and enhancing our ability to deliver customer-centric outcomes across the full technology solutions stack and life cycle,” she said. “We look forward to welcoming the talented Sirius team, and leveraging our common values and collective unparalleled expertise to deliver the best customer experience and create value for CDW shareholders.”

Pros and Cons

Hansa Iyengar is principal analyst of IT strategy and lead analyst in Omdia’s enterprise technology advisory service.

Omdia’s Hansa Iyengar

“Sirius will indeed add heft to CDW’s services portfolio, especially it’s security, cloud-native and digital services,” she said. “However, the acquisition does not really diversify CDW’s portfolio. Despite paying $2.5 billion for the acquisition, CDW gains primarily U.S. or North America customers and … in very similar vertical segments, which essentially is like putting more eggs in one basket as any risk or turmoil in the U.S. market or in one of its larger verticals will hit CDW harder than before. The other drawback is that offshore presence still remains limited for the combined entity, making it harder to compete with other SIs on price when competing for high-value deals.”

Two of Sirius’ cybersecurity partners gave thumbs-up to the acquisition.

Frank Rauch is head of Check Point Software‘s worldwide channel sales.

Check Point’s Frank Rauch

“CDW’s acquisition of Sirius is exciting news for Check Point,” he said. “Both companies are strategic partners and have made significant investments in enablement and demand generation. The acquisition will definitely benefit Check Point in terms of market reach, new customer acquisition and accelerated adoption of emerging technologies.”

Karl Soderlund is senior vice president of worldwide channel sales at Palo Alto Networks. Both CDW and Sirius are Palo Alto Networks NextWave partners.

Palo Alto Networks’ Karl Soderlund

“We are thrilled to see two top performing NextWave partners coming together,” he said. “The acquisition of Sirius Computer Solutions will enhance CDW’s services and MSSP capabilities, and enable Palo Alto Networks to drive further business growth at scale.”

Larger, Stronger Organization

Joe Mertens is Sirius’ president and CEO.

“We have long admired CDW, and welcome the opportunity to bring our complementary services and solutions capabilities to serve a broader market of customers as a combined company,” he said. “Sirius and CDW share common values and a performance-driven, customer-focused culture. We look forward to the opportunity to combine Sirius’ considerable talents with CDW’s, and to being part of a larger, stronger organization that will be even better positioned for growth in the evolving IT services and solutions landscape.”