Avnet Inc to sell its IT business to Tech Data Corp for $2.6 billion

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U.S. electrical components distributor Avnet Inc said it would sell its IT business to technology products distributor Tech Data Corp for about $2.6 billion.

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

Tech Data’s shares were up nearly 5 percent at $72.80 in premarket trading on Monday, while Avnet’s shares were up 8.4 percent at $42.50.

Avnet said the deal will help it focus on design chain and supply chain services and invest in businesses such as embedded solutions, Internet of Things 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 $35 billion, 53 percent 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 Chief Executive Bob Dutkowsky said.

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

Tech Data said expects to realize about $200 million in the present value of tax benefits. It also expects to generate about $100 million in annualized cost savings two years after the deal closes. The transaction is expected to close in the first half of 2017.


This article has been posted by a News Hour Correspondent. For queries, please contact through [email protected]
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