Monday, March 29, 2010
Avnet to purchase Bell Microproducts in $549M deal
Phoenix Business Journal - by Patrick O'Grady
Avnet Inc. plans to purchase Bell Microproducts Inc. in a $594 million deal, a move that could add $3 billion to the company’s revenue.
Phoenix-based Avnet (NYSE:AVT) announced the deal on Monday with the San Jose, Calif.-based Bell Micro. Avnet officials say the move will boost its operations in North America, Latin America and Europe.
“We are very excited about the opportunity to build additional scale and scope in storage and computing solutions as well as increase our presence in the fast-growing Latin America market,” said Avnet CEO Roy Vallee in a statement. “Bell’s position in datacenter products and embedded systems complements Avnet’s current strategies and creates opportunities for cross selling.”
Avnet will purchase Bell Micro for $7 a share in cash, equaling about $252 million. The remainder of the value comes from Bell Micro’s $342 million debt position as of the end of 2009. The companies expect the deal to close within two to four months.
Bell was founded in 1988 and is a distributor for computer storage and other technology. It had $837 million in revenue in the fourth quarter of 2009 and $3 billion for the year. Most of its business is split between North America and Europe, with about 17 percent coming from Latin America.
Avnet officials expect to save $50 million to $60 million annually through the purchase with the cost of integrating the two companies pegged at $20 million to $30 million.
Don Bell, founder and CEO of Bell Micro, said the sale will enable the company to reach new channels with Avnet’s ability to tap global markets.
“Given the rising demands of global technology markets, the investment required to deliver leading edge technical support and competitive supply chain networks continues to grow,” he said in a statement. “Avnet’s financial resources and global infrastructure will allow the Bell organization to deliver industry-leading value to our customers and continue our long history of growth and market share gains.”
As a result of he deal, Avnet adjusted its third-quarter guidance, estimating its consolidated revenue for the quarter will between $4.4 billion and $4.7 billion
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