Avnet To Acquire Bell Micro

by Gaurav Kheterpal on March 31, 2010

Avnet to acquire Bell Micro

Avnet to acquire Bell Micro

Phoenix-based semiconductor distribution giant Avnet Inc. has reported that it is acquiring Bell Microproducts Inc. in an all cash deal for $7.00 per share, amounting to $252 million. Avnet is a well known publicly listed global distributor of electronic parts, enterprise computing and storage products. Bell Microproducts is a value added distributor focused on storage and computing technology. 

Strategically, it’s a good move by Avnet as Bell Microproducts enjoys a strong position in datacenter products and embedded systems, which will help create new opportunities for cross selling. Further, Bell Microproducts has a dominant position in hard disk drive distribution, which increases Avnet’s exposure to this product segment. Avnet has been on the lookout for acquisitions for a while, and is looking to spend a substantial amount on acquisitions this year. Bell Microproducts was founded in 1988 and employs over 1,900 employees in 55 offices around the world. It offers a broad suite of integration and support services to OEMs, VARs, system builders and end users through 55 offices in the United States, Canada, Europe and Latin America. Avnet is an established player and has been around since 1921. It has offices in over 300 locations across the globe, and employs roughly 12,000 people.

 
Avnet is not new to acquisitions. In 2005, Avnet closed the acquisition of privately held Memec Group Holdings limited, a major competitor. Avnet’s biggest business rivals include Agilysys, Future Electronics and Arrow Electronics. Apart from these big players, Avnet also faces competition from smaller players which specialize in a single product or groups of products. Despite the stiff competition, Avnet has maintained a strong position in the market. It has a wide range of products and services (which will be further strengthened by the recent acquisition of Bell Microproducts), solid inventory and strong customer relationships have helped it secure a substantial share of the market. 

Off late, Avnet has been focusing on embedded computing as the major target segment. This deal will allow Avnet to leverage Bell’s strong storage capabilities. As a result of this deal, Avnet expects consolidated sales to be between $4.45 and $4.70 billion. Due to the higher revenues and an improved business mix, Avnet expects earnings to be in the range of $0.60 to $0.66 per share. Avnet’s previous Q3 outlook, which was provided on January 28, 2010, expected sales of $4.10 to $4.70 billion and EPS of $0.53 to $0.61. Separately, Bell forecast first-quarter revenue of $795 million to $815 million. It was previously expecting revenue of $780 million to $815 million. The above EPS guidance does not include any potential restructuring charges or integration charges related to acquisitions.

The acquisition has been approved by the Boards of Directors of both companies and is subject to the approval of Bell’s shareholders as well as customary regulatory approvals. The transaction is expected to close in 60 to 120 days. 

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.com by: RSSTwitter,Identi.ca, or Friendfeed

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