Tech Data buys Avnet

jonah2Tech Data is to buy Avnet Technology Solutions for $2.6bn in a move which will create one of the biggest enterprise IT distribution companies.

Tech Data will write a cheque for $2.4bn in cash and 2.785 million of its shares.

Tech data surpremo Bob Dutkowsky said the “strategic and financial benefits resulting from this transformative combination are compelling for both our company and our shareholders.”

Avnet  president Patrick Zammit claimed the scale of Tech Data, which is the second largest tech distribution company worldwide – would allow it to “unlock value in ways we could not historically.”

Avnet gives Tech Data access to multiple franchises including IBM, HDS, and NetApp, and makes it the undisputed king of EMC distribution.

Things have not been so hot for both outfits lately. Tech Data sales fell to $26.37bn for FY’16 ended 31 January, versus $27.67bn in the prior year, and it reported operating profit of $401.4m from $267.6m. Data centre kit accounted for roughly 30 per cent of this. Avnet TS sales fell to $9.65bn for FY’16 ended 2 July vs $10.58bn, and operating profit came in at $725.9m compared to $797.4m.

All this menas that Tech Data operations will go up from 21 to 35 countries worldwide. Europe will account for a little over half of group sales. Avnet trades with 20,000 customers, though how much overlap there already is with the 105,000 that Tech Data sells to is unclear at this stage.

Tech Data said it expects to make $100m in cost savings within two years after closing the transaction.