Home / / Avnet to sell tech solutions business unit to Tech Data for $2.6bn

Avnet to sell tech solutions business unit to Tech Data for $2.6bn

Move will accelerate the company’s strategy to focus on high growth markets

Avnet to sell tech solutions business unit to Tech Data for $2.6bn
Avnet says it will get $2.4bn in cash and 2.8m Tech Data shares when the deal closes.

US-based components distributor Avnet Inc, has said it would sell its IT business to technology products distributor Tech Data Corp for about $2.6bn.

Avnet, whose IT business has competed with Tech Data for years, said it would get $2.4bn in cash and 2.8m Tech Data shares, worth a stake of about 7% in the company.

Avnet said in a prepared statement that the deal will help it focus on design chain and supply chain services and invest in businesses such as embedded solutions, Internet of Things (IoT) and critical digital platforms.

For Tech Data, the deal will help it expand its operations to 35 from 21 countries and give it proforma revenue of about $35bn, 53% of which will come from Europe.

"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," Tech Data CEO Bob Dutkowsky said.

Avnet said it expects to realise a gain of $3.75 to $4.75 per share after the cash-and-stock deal closes.

Tech Data said it expects to realise about $200m in present value of tax benefits. It also expects generate about $100m in annualised cost savings two years after the deal closes.

The sale of this business provides both Avnet and Tech Data with immediate opportunities to focus on core strategies and scale their respective businesses, ultimately delivering greater profitability to their shareholders.

"We believe the acquisition of Technology Solutions by Tech Data is the best decision for our employees, customers, suppliers and shareholders. This transaction presents us with the best strategic path for Avnet's future success and profitability, and puts Technology Solutions in position to achieve breakthrough business results with Tech Data," said William Amelio, CEO at Avnet. "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. 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 transaction is expected to close in the first half of 2017.

In 2013, Avnet Technology Solutions exited the Middle East and Africa (MEA) market.

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