Tech Data acquires Avnet for $2.6 Billion

Next-generation technologies, including converged and hyperconverged infrastructure, security, analytics and the cloud, represent a more than $450-billion market opportunity, which is expected to grow at a 13 per cent compounded annual growth rate through 2019. It is absolutely true that the IT and telecom industry is undergoing consolidation with M&A. The recent announcement of the Tech Data to purchase technology solutions business Avnet Technology Solutions (ATS), known as Avnet. Tech Data, has agreed to acquire Avnet's Technology Solutions business, which specializes in data center solutions. This transaction will create a premier global IT distributor with the most diverse end-to-end solutions from the data center to the living room. Both the parties have entered into a definitive agreement to acquire the Technology Solutions business from Avnet, Inc. for $2.4 billion in cash and 2.785 million shares of Tech Data common stock, in a transaction valued at approximately $2.6 billion. With Technology Solutions, Tech Data will be one of the world’s premier global IT distributors with the most diverse end-to-end solutions, from the data center to the living room, with operations in 35 countries. Bob Dutkowsky, CEO, Tech Data, said, "The combination of Tech Data and Technology Solutions will create a premier IT distributor with unmatched skills, consultative expertise, and strong partner relationships to help its customers capture these next-generation technology opportunities." He added that the world of technology was changing and there was a blurring of the lines as users took IT between home and work. Technology Solutions partners with more than 40 of the world’s top IT vendors to address the IT business needs of 20,000 customers in more than 80 countries. Tech Data has similarly strong and diversified relationships with more than 600 vendors and 105,000 customers. As a combined company, the Tech Data and Technology Solutions businesses can offer a broader and differentiated set of solutions to a larger and more diversified customer base, while enhancing relationships with channel partners. William Amelio, CEO of Avnet, said, "When we evaluated this transaction, we concluded that this transaction is in the best interest of our employees, customers and partners." He further added, "Cloud expanded and the need for a wider solution became a necessity. It made sense to sell off the technology business to Tech Data, which would now be in a position to meet that challenge. After the ATS sale, Avnet will be a $17-billion company. Operating income margins are expected to improve quite substantially. The deal is expected to close in the first half of 2017."