Avnet Sells Technology Solutions Unit to Tech Data

Avnet today announced that it has agreed to sell its Technology Solutions operating group to Tech Data Corp. The deal is valued at $2.6 billion, including $2.4 billion in cash and 2.8 million shares of Tech Data common stock (currently valued at approximately $200 million).

Calling it the “best strategic path” for both companies, Avnet CEO  William Amelio pointed to potential for greater profitability as a key driver in the decision. In a written statement, Amelio said:

Moving forward, Avnet will focus its resources and investments on becoming a leader in design chain and supply chain services not only for our current customers and suppliers, but also for new markets. We will drive targeted investments in embedded solutions, Internet of Things (IoT) and critical digital platforms. By investing in these high growth areas, we can expand the breadth of our portfolio and attract new customers worldwide who depend on us to deliver world-class solutions.

The shift will put Avnet's focus squarely on electronics distribution, and away from the datacenter and IT solutions, marketing, training and services sold through its Technology Solutions group. “Avnet believes that as a pure-play components distributor moving forward, it can provide more focused attention and value to its customers and suppliers,” the company told EBN.

The Technology Solutions group sells global IT solutions to customers and suppliers in more than 80 countries. Core customers include independent software vendors (ISVs), original equipment manufacturers (OEMs), system builders, system integrators (SIs), and value-added resellers (VARs).

With the completion of the sale, Avnet anticipates a gain of $3.75 to $4.75 per share. The closing of the transaction, which is subject to customary regulatory approvals, is expected to occur in the first half of 2017.

Additionally, Avnet and Tech Data report that they intend to partner on delivering IoT end-to-end solutions to the market. Avnet told EBN: 

In terms of IoT, the company will continue to build on its momentum in IoT. Partnering on IoT to bring the best solutions to market is something that Avnet has been doing for some time now between Avnet's Electronics Marketing and Technology Solutions businesses. Avnet's intent is to develop organic solutions and partner with IoT-related service providers (e.g., analytics, cloud services). This includes a continuing partnership with Tech Data once Technology Solutions becomes a part of their organization. 

The sale comes on the heels of Avnet putting in a bid for Premier Farnell in July. That acquisition is expected to be complete in November. “Together, with its focus on design-chain and supply chain solutions, and the acquisition of Premier Farnell, this represents a compelling value for customers and suppliers. Avnet will be able to capture customers early in the design cycle and seamlessly support them through their product lifecycle,” Avnet said.

— Hailey Lynne McKeefry, Editor in Chief, EBN Circle me on Google+ Follow me on Twitter Visit my LinkedIn page Friend me on Facebook

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