ScanSource has agreed to buy IT services provider MicroAge for $220.5 million in cash, giving the technology distributor a larger role in cloud, cybersecurity, data-centre and artificial intelligence projects.
The deal was signed on 19 August and announced alongside ScanSource’s fourth-quarter results on 20 August 2026. ScanSource expects it to close during the quarter ending 30 September, subject to regulatory approval and other customary conditions.
This is a signed agreement, not a completed acquisition. The Form 8-K filed with the US Securities and Exchange Commission says the final price is also subject to working-capital and other post-closing adjustments.
MicroAge adds managed services and 2,400 clients
MicroAge describes itself as an IT solutions integrator. In practical terms, it helps companies choose technology from different suppliers, connect the systems and keep them working together.
It is also a managed services provider, or MSP. An MSP takes ongoing responsibility for parts of a customer’s IT operation, such as monitoring networks, maintaining systems or managing cybersecurity, usually under a recurring contract.
MicroAge serves about 2,400 US clients and has more than 200 employees. Its supplier relationships include Microsoft, Dell, Sophos, Hewlett Packard Enterprise, CrowdStrike and VMware, according to ScanSource’s acquisition announcement.
That customer access matters to ScanSource. Its core business distributes technology to resellers and other channel partners. MicroAge works more directly on customers’ IT environments, which should give ScanSource a clearer view of what companies are buying and why.
Management expects the acquisition to raise ScanSource’s gross profit margin, adjusted EBITDA margin and non-GAAP earnings per share during the first year after closing. It also expects the deal to be free-cash-flow positive. These are company forecasts, not guaranteed outcomes, and ScanSource has not published MicroAge’s revenue or profit in the announcement.
Hardware demand lifted quarterly sales
ScanSource enters the deal after a strong final quarter. Net sales increased 17.3% from a year earlier to $953.1 million. GAAP net income rose 27.5% to $25.6 million, while diluted earnings per share increased from $0.88 to $1.24.
The growth was driven mainly by hardware demand in North America. Sales in Specialty Technology Solutions, by far the larger of ScanSource’s two reporting segments, rose 17.6% to $927.2 million.
Rapid sales growth did not produce a wider gross margin in the quarter. Gross profit margin fell 35 basis points to 12.6%. A basis point is one-hundredth of a percentage point, so 35 basis points equals 0.35 percentage points.
The full-year picture was better. For the year ended 30 June, sales increased 6.1% to $3.23 billion and gross profit margin rose 20 basis points to 13.6%. The share of gross profit generated by recurring revenue also increased from 32.8% to 33.7%.
Those figures help explain the timing of the MicroAge agreement. Hardware can generate large sales volumes, but service contracts can make revenue and profit more repeatable. MicroAge gives ScanSource another route to that type of business, although the financial benefit will depend on customer retention, integration costs and the price paid for growth.
Debt funding makes cash generation important
ScanSource plans to pay the purchase price with borrowings under its existing credit facility. A credit facility is a pre-arranged lending line that a company can draw when it needs funds. The seller still receives cash, but ScanSource will take on additional financing rather than fund the entire deal from cash already on its balance sheet.
At 30 June, ScanSource had $88.4 million of cash and $101.4 million of debt. It generated $113.8 million of non-GAAP free cash flow during the 2026 financial year. The $220.5 million purchase price is therefore nearly twice one year’s free cash flow, before any price adjustments.
That comparison does not tell investors what the final debt balance or interest bill will be. It does show why cash conversion after the acquisition matters. ScanSource will need MicroAge to add enough profit and cash to cover financing costs while preserving room for investment elsewhere in the business.
ScanSource’s 2027 financial outlook calls for sales growth of 6% to 10%, adjusted EBITDA of $158 million to $165 million and at least $85 million of free cash flow. The company explicitly excludes the pending MicroAge acquisition and its purchase-accounting effects from that guidance.
The deal therefore creates two separate tests. ScanSource must first close the transaction on the expected timetable. It must then show that a larger services operation can improve the quality of its earnings enough to justify the borrowing and purchase price.
