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CDW Corp. announced today that it plans to acquire Sirius Computer Solutions for $2.5 billion in cash, combining two of the top channel companies.

CDW will acquire Sirius from an affiliate of private equity firm Clayton, Dubilier & Rice. The combined company would boast $20 billion in net sales, based on full-year 2020 results.

Founded in 1980, Sirius provides IT solutions for about 3,900 large and mid-sized customers and is one of the largest IT solutions integrators in the U.S, with about $2 billion in net sales. Sirius and its 2,600 will offer CDW new capabilities in hybrid infrastructure, security, digital and data innovation, and cloud and managed services.

CDW CEO Christine Leahy said in a statement, “As customers require increasingly complex and critical digital transformation initiatives, Sirius’ broad portfolio of world-class technology-based solutions and services-led approach will immediately add to our capabilities to meet this demand.

The combined business will help CDW “deliver customer-centric outcomes across the full technology solutions stack and lifecycle,” Leahy said.

Sirius CEO Joe Mertens said the company is looking forward “to being part of a larger, stronger organization that will be even better positioned for growth in the evolving IT services and solutions landscape.”

CDW was founded in 1984 and is a Fortune 500 company with 10,500 employees. The company is expected by analysts to generate $20.4 billion in sales this year and $21.5 billion in 2022, for a solid if unspectacular 5.4% growth rate.

Service Business Gets a Boost

Sirius is expected to expand CDW’s Services portfolio by about 45%, from $900 million annual net sales in 2020 to approximately $1.3 billion in combined annual net sales. The increased mix of services is expected to diversify CDW’s business and improve profitability, with earnings forecasted to grow 12% over the next year.

In a channel market that has largely moved to managed services, CDW is something of a holdout, still referring to itself as a value-added reseller (VAR). And with more than 100,000 products from 1,000+ brands and over 250,000 customers in the U.S., UK and Canada, VAR is a pretty good term for the bulk of CDW’s business.

CDW shares rose 5% on the news, suggesting a positive view of the deal by investors; acquiring companies often see their share prices fall on such news. The merger is expected to close in December.

Further reading: Top 12 Managed Security Service Providers (MSSPs) of 2021