Bekker's Blog

Blog archive

Tech Data To Acquire Avnet Technology Solutions

With its $2.6 billion acquisition of the Technology Solutions portion of Avnet Inc., Tech Data Corp. would bolster its datacenter business and gain a toehold in the Asia-Pacific region.

The blockbuster distribution deal, announced Monday and involving a mix of $2.4 billion in cash and 2.785 million shares of Tech Data common stock, is expected to close in the first half of 2017.

From a revenue standpoint, the deal would make Tech Data about a third larger. Pro forma revenues for the 12 months leading up to July 31 would have been $35 billion for the combined company rather than Tech Data's $26 billion.

Avnet Technology Solutions (ATS) is a much smaller operation with about 40 vendors and 20,000 customers compared to Tech Data's 600 vendors and 105,000 customers. But ATS' focus on converged and hyperconverged infrastructure and other next-generation datacenter technology is a big part of what Tech Data found attractive.

According to the companies, in the year leading up to July 31, "revenue attributable to complex, higher-margin datacenter offerings" would have accounted for 45 percent of total revenue for the combined companies, compared with 29 percent for Tech Data alone. Operating income would have more than doubled over the same period, on a pro forma, non-GAAP basis while accounting for some expected cost savings, the companies said.

The move also gives Tech Data some presence in the Asia-Pacific region where it doesn't currently compete. The company would go from having operations in 21 countries today to 35 countries upon close. Tech Data's current revenue mix is 61 percent in Europe and 39 percent in North America. With ATS included, the mix would be 53 percent in Europe, 44 percent in North America and 3 percent in Asia/Pacific.

Posted by Scott Bekker on September 19, 2016 at 9:27 AM


Featured

  • 2019 Microsoft Conference Calendar: For Partners, IT Pros and Developers

    Here's your guide to all the IT training sessions, partner meet-ups and annual Microsoft conferences you won't want to miss this year.

  • Microsoft Rolls Out SQL Server 2019 RC1

    The first release candidate of the forthcoming SQL Server 2019 product can now be downloaded from Microsoft's Evaluation Center page.

  • The 2019 Microsoft Product Roadmap

    From the next major update to Windows 10 to the next generation of HoloLens, here's what's on tap from Microsoft this year.

  • Microsoft, Tech Leaders Back Confidential Computing Consortium

    The Linux Foundation on Wednesday announced the formation of a new group that aims to ensure the security of processed data.

RCP Update

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.