Becomes Europe’s leading value-added distributor for enterprise solutions
Phoenix -- Avnet, Inc. (NYSE: AVT) announced today that it has entered into a definitive agreement to acquire the European Enterprise Infrastructure Division of value-added distributor Magirus Group. With annual revenues of approximately $500 million, the acquired business will be integrated into the European operations of Avnet Technology Solutions (TS), the IT distribution group of Avnet, Inc. The agreement covers the distribution of servers, storage systems, software and services of IBM and Hewlett-Packard to resellers in seven European countries and Dubai. With this transaction, Magirus is exiting the IBM and HP enterprise business and will in the future concentrate on building other segments of its business.
Subject to customary regulatory approval, the transaction is expected to close in October 2007 and the business integration is expected to be complete by June 2008. This acquisition brings Avnet approximately 140 talented employees responsible for marketing and sales in Austria, Denmark, Germany, Italy, Sweden, Switzerland, the United Kingdom and Dubai, along with 1300 established value-added reseller customers. The transaction is expected to meet the company’s stated return-on-capital-employed goal and should be accretive to Avnet’s earnings per share by roughly 8 cents in calendar 2008.
Roy Vallee, Avnet’s chairman and chief executive officer, commented, ’With this acquisition, Avnet Technology Solutions will be the largest value-added distributor for enterprise solutions in Europe. This strategic investment in our Technology Solutions business in EMEA (Europe Middle East and Africa) is consistent with our stated desire to expand our successful TS business model globally.’
’This acquisition significantly expands our presence and product offerings with both IBM and HP in Europe,’ said Dick Borsboom, president of Avnet Technology Solutions, EMEA. ’Not only does this acquisition broaden our geographic coverage, it also enhances our market position by combining the strengths of both organizations. For example, whilst Magirus addresses the high-end server market with HP solutions in Germany, Avnet has until now focused on Intel-oriented server resellers, along with storage and monitors in that country. Combining the two organizations gives customers the benefit of being able to select the solution that best meets their needs and gives Avnet a much broader reseller base to grow with. In Austria, Switzerland, Denmark, Italy and Dubai, Avnet will be adding HP to its offerings and will now represent HP in seven European countries. There were already plans at Avnet to build the enterprise, solutions and services business in Scandinavia, and this acquisition creates a good platform for us to start doing so in Denmark and Sweden,’ Borsboom added.
Manufacturers of enterprise infrastructure solutions will also benefit from the move by making it possible for them to work with fewer large distributors with the services and capital to accelerate growth on a pan-European basis. This will also make it easier and more efficient for them to do business through the channel. The acquisition builds on Avnet’s previous transactions in the region, including the acquisition of Belgian auto-ID distributor Printex in March last year; the acquisition of certain assets of the German storage wholesaler Zeta in June, and the acquisition of Sun specialist Access Distribution at the beginning of this calendar year.
’The most critical task after the transaction is closed is integrating the organization without any disruption to our customer and supplier partners,’ said John Paget, president, Avnet Technology Solutions, Global. ’We welcome the new employees who we know bring strong technical skills and talents, along with excellent customer and vendor relationships. Their added expertise will help us accelerate growth by offering increased value to the marketplace.’
Banc of America Securities LLC acted as a financial advisor and Allen & Overy LLP acted as legal counsel to Avnet in connection with this transaction.
Forward Looking Statements
This press release contains certain ’forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on management’s current expectations and are subject to uncertainty and changes in factual circumstances. The forward-looking statements herein include statements addressing post-closing integration activities, future financial and operating results of Avnet and may include words such as ’will,’ ’anticipate,’ ’expect,’ believe,’ and ’should,’ and other words and terms of similar meaning in connection with any discussions of future operating or financial performance or business prospects. Actual results may vary materially from the current expectations.
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