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Tech Data Buys Avnet's IT Business in Big Distribution Acquisition

By Edward Gately
September 19, 2016 - News

Edward Gately**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in July-August 2016.**

Tech Data is buying a big chunk of competing distributor Avnet, its technology solutions operating group, in a cash and stock deal valued at about $2.6 billion.

Avnet reported $26.2 billion in fiscal year 2016 annual revenue, with electronics marketing comprising $16.6 billion and technology solutions contributing $9.7 billion.

The purchase expands Tech Data’s reach across technologies and the world to establish it as “one of the world's most diverse end-to-end global IT distributors with operations in 35 countries," the company said. The deal is expected to close in the first half of 2017, subject to customary closing conditions and regulatory approvals.

Avnet will receive $2.4 billion in cash and 2.8 million shares of Tech Data common stock, currently valued at about $200 million.

"We are excited to announce this transformative transaction, which creates a premier global IT distributor with the most diverse end-to-end solutions from the data center to the living room," said Bob Dutkowsky, Tech Data’s CEO. "This combination complements our value-added distribution capabilities in Europe and the Americas, while establishing Tech Data's presence in Asia-Pacific, which will be a new market for us. As a result of the enhanced value proposition created through this transaction, Tech Data will be even better positioned to capture opportunities in next-generation technologies, deliver differentiated value to our customers and vendor partners, support career development for our employees, and generate strong returns for our shareholders."

Tech Data expects to gain about $100 million in annual cost savings within two years after closing, primarily from efficiencies related to technology platforms, as well as duplicative functions and corporate expenses.

Maureen O’Leary, director of media relations for Avnet corporate, tells Channel Partners that “we are seeing a convergence of distribution models."

“Technology solutions and Tech Data are complementary businesses," she said. “By adding Technology Solutions to the Tech Data portfolio, they will be a premier global IT distributor with the most diverse end-to-end solutions which will in turn benefit partners. Additionally, this acquisition will benefit the partner community because it expands Tech Data’s value-added distribution capabilities and enhances their ability to capitalize on next-generation technologies — areas partners will be able to ...

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