Avnet strides into Middle East with Magirus deal

Storage distributor Magirus has offloaded its enterprise infrastructure division to US-based Avnet in a deal that has huge implications for both companies' Middle East aspirations.

As part of an agreement expected to close before the end of October, New York-listed Avnet will gain control of Magirus' HP and IBM-focused division in Dubai as well as the equivalent operations in seven European countries. The move signals the arrival of Avnet's Technology Solutions (ATS) subsidiary in the Middle East enterprise distribution market as only its components and semiconductor units operate directly in the region at the moment.

The 140-strong business that Avnet has snapped up encompasses the distribution of servers, storage systems, software and services from HP and IBM and will be integrated into the European operations of Avnet Technology Solutions.

Just a quarter of Magirus' 20-strong Middle East workforce is impacted by the sale and they will transfer to Avnet once it has finalised its set-up in the region. Vimal Kocher, general manager at Magirus' Dubai operation (pictured), told Channel Middle East: "As far as the Middle East business goes we have HP and IBM on the one side and then the EMC, virtualisation team and other businesses, which will still remain with Magirus. Only the HP and IBM businesses - and the people directly working for thoses businesses - will go to the new company."

Germany-based Magirus will now shift its attention to other areas of its portfolio, such as security, open source, storage management and intelligent networks, which typically promise stronger margins than those seen in the enterprise hardware sector. That strategy will also be mirrored locally, according to Kocher. "If you take the main vendors then EMC is there, along with VMware, and then we also have a couple of virtualisation software companies like PlateSpin and DataCore," he said. "We have some security companies too and although we have not really worked on the security business in the Middle East yet, we plan to do it as soon as possible."

As a result of shedding its infrastructure business, Magirus will be a significantly smaller operation than the one that recorded group sales in excess of US$950m last year. However, Magirus chairman Fabian Von Kuenheim, believes the move will enable the distributor to better position itself in the market.

"We have always reacted speedily to changing technology trends and new business models," he said. "The sale of our successful enterprise infrastructure division from a position of strength, makes available resources and management capacity to grow our business in new areas, allowing us to focus on our rapidly expanding and successful IT solutions business. Also, our strategy will include further acquisitions to support the growth we are striving for."

Meanwhile, the prospect of further ramping up its coverage of the EMEA enterprise distribution market clearly remains an attractive one for Avnet given it has already digested Belgian auto-ID distributor Printex, German storage specialist Zeta and Sun Microsystems-focused Access Distribution during the past 18 months.

"This strategic investment in our Technology Solutions business in EMEA is consistent with our stated desire to expand our successful TS business more globally," stated Roy Vallee, chairman and CEO at Avnet.