INACOM AND VANSTAR TO COMBINE TO CREATE
LEADING PLAYER IN TECHNOLOGY SERVICES SECTOR
OMAHA, NE, and ATLANTA, GA, OCTOBER 9, 1998 -- InaCom Corp. (NYSE: ICO) and
Vanstar Corporation (NYSE: VST) announced today that they have signed a
definitive merger agreement in which Vanstar will merge with a wholly owned
subsidiary of InaCom. The combined companies currently employ more than 12,000
people and have current annualized pro forma revenues of approximately $7
billion, including current annualized pro forma service revenues of
approximately $800 million.
"This transaction makes business sense in two key areas," said Bill Fairfield,
President and Chief Executive Officer of InaCom. "First, we will be creating a
leading technology services company with approximately 7,300 services personnel,
including over 600 Microsoft Certified Systems Engineers and a significant
number of Cisco Certified Industrial Engineers. Second, we will achieve a
leadership position in providing computer products with the industry's largest
customer base. Additionally, InaCom will be the world's largest provider of
Intel-based products and PC technology for IBM, Hewlett Packard and Compaq."
The transaction will be tax-free to shareholders and accounted for as a pooling
of interests. Vanstar shareholders will receive 0.64 shares of InaCom Common
Stock for each share of Vanstar Common Stock. In connection with the execution
of the merger agreement today, Warburg Pincus Capital Company, L.P., holder of
approximately 38% of the outstanding Vanstar Common Stock, and the members of
the Boards of both companies have agreed to vote their shares in favor of the
transaction. InaCom has agreed to increase the size of its board of directors
from nine to 13 members. The additional directors will include: Bill Tauscher,
Chairman and Chief Executive Officer of Vanstar, a Managing Director of Warburg
Pincus & Co., LLC; and two other members to be named from Vanstar's current
independent Board of Directors.
The transaction, which is subject to regulatory and shareholder approval by both
companies, and other customary closing conditions, is expected to close during
the fourth quarter of 1998 or first quarter of 1999. The transaction is expected
to be accretive to earnings by the end of 1999. InaCom expects to record a
material pre-tax charge following consummation of the merger to cover the direct
costs of the merger, the cost of integrating certain aspects of the businesses
of InaCom and Vanstar, the cost of canceling certain purchase commitments, the
costs of employee terminations and facility expenses to eliminate duplicative
functions and locations, and other unusual items. InaCom estimates the pre-tax
charge to be in the range of approximately $120 to $155 million. In addition, in
connection with the implementation of the merger, the combined company expects
to continue an assessment and study of assets and resources required to carry
out business objectives and
plans. Following the closing, InaCom expects to incur costs to align the
combined companies' operations to meet the changing conditions of the industry,
which costs are in addition to the merger-related changes. InaCom preliminarily
estimates the additional costs related to the integration and alignment of the
combined company to be from $40 to $80 million, on a pre-tax basis. These
amounts and the nature of the costs included therein, as well as the period in
which these costs are recorded, cannot be determined until InaCom's integration
plans are more fully developed and implemented and more accurate estimates
become available. Vanstar has previously announced that it expects to take a
restructuring charge of approximately $50 million in its second quarter of
fiscal 1999.
"This combination will leverage our fixed costs over a larger base in the
hardware and services businesses and provide the kind of critical mass that will
enhance our growth potential. It will also create a platform for both organic
growth and further acquisitions," commented Dave Guenthner, Chief Financial
Officer of InaCom. "The charges and costs to be taken in connection with this
transaction, and Vanstar's previously announced restructuring, are expected to
provide annual cost savings in excess of $150 million."
"At a time in our industry when clients are demanding access to more and more
offerings from a single source, and ever-closer relationships, we believe that
joining together InaCom and Vanstar presents opportunities for our clients,
employees and shareholders," said Bill Tauscher, Chairman and Chief Executive
Officer of Vanstar. "Over the years, Vanstar has built a leading reputation for
services. That reputation has been earned through the efforts and talents of our
employee base. Obviously, our people are what has made us particularly
attractive, and I believe that this combination will offer employees greater
opportunities to continue to progress in their career and succeed in the
technology industry."
"The new InaCom is committed to employing the best practices from all of our
combined operations, so that we are able to provide the highest standards of
services and the best technology solutions for our clients," added Bill
Fairfield. "Clients provide the most powerful evidence for the strength of our
business model compared to the so-called "direct" model espoused by companies
like Dell. The simple fact is that while "direct" may seem like an appealing
marketing concept, it is often found wanting by clients who seek a single,
reliable source for information technology and services.
The new InaCom model will meet that need."
This press release contains forward-looking statements relating to the merger
and certain results expected therefrom, including anticipated cost savings,
charges expected to be incurred in connection with the merger and the subsequent
alignment of the combined company, and other information regarding the combined
company. Those statements involve risks and uncertainties that
could cause actual results to differ materially from the results discussed
herein. Factors that might cause such a difference include, but are not limited
to, the companies' ability to consummate the merger in the planned time frame,
the companies' ability to successfully integrate their businesses without
unforeseen costs or difficulties and to successfully implement planned
cost-saving measures; changes in customers or other business disruption
associated with the merger, competitive conditions in the industry; and changes
in demand for the companies' products and services. Recipients of this press
release are cautioned not to place undue reliance on the forward-looking
statements made herein.
InaCom is a Fortune 500 global technology management services company. InaCom
works closely with clients to keep their information technology running smoothly
by providing the best procurement, deployment and management solutions. For more
information on InaCom, visit www.Inacom.com.
Vanstar is a leading provider of consulting, product and support services to
design, build, manage and enhance computer network infrastructures of Fortune
1000 companies and other large enterprises. The company provides customized,
integrated solutions through comprehensive Life Cycle Services. Through its
Professional Services Organization, Vanstar offers extensive consulting
expertise through national practices focused on emerging technologies. For more
information on Vanstar, visit www.Vanstar.com.
Media Contact: Robert Mead
BSMG Worldwide
212-445-8208
Geri Michelic
402-758-3923
InaCom Investor Contact: John Lambrechts
(402) 758-3281
Vanstar Investor Contact: Christine Mohrmann
(404) 522-4262
# # #