Leading global technology distributor Avnet, Inc. (NYSE: AVT) is selling its Technology Solutions business unit to Tech Data Corporation (NASDAQ: TECD) for $2.6 billion, according to a company press release issued on Monday, September 19. Under the agreement, Tech Data will pay $2.4 billion in cash and the remaining $200 million in common stock, a total of 2.8 million shares.
The Technology Solutions business unit is a global distributor of IT solutions that serves suppliers and customers in more than 80 countries. The unit offers a wide range of next generation solutions, training, marketing, services and resources encompassing the entire IT lifecycle and works closely with resellers to make it more affordable to enter high-growth tech markets around the world.
Phoenix-based Avnet expects to gain $3.75 to $4.75 per share upon completion of the transaction, which is estimated to be finalized in the first or second quarter of 2017. For this deal, Avnet received financial advice from Citi and Allen & Company LLC, while Gibson, Dunn & Crutcher LLP acted as legal advisor.
The transaction will allow both Tech Data and Avnet to scale their businesses and focus on their core strategies, with the goal of delivering greater profitability to shareholders. Avnet CEO William Amelio voiced confidence that the sale is the best decision for the company’s employees, shareholders, customers and suppliers, and that it serves as the best strategic path for the company’s profitability and future success. Going forward, Avnet will focus its investments and resources on becoming a leader in supply chain and design chain services. In a news release, Amelio explained, “We will drive targeted investments in embedded solutions, Internet of Things (IOT) and critical digital platforms. 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.”
Tech Data CEO Bob Dutkowsky also praised the transaction, saying it will position his company as a leading global IT distributor that will provide the most diverse end-to-end solutions. He said Tech Data was thrilled to start this journey with Avnet Technology Solutions, a business it has admired for years, and voiced confidence that his company’s partners, employees and shareholders will appreciate and benefit from the opportunities that this business combination will give birth to.
In addition to the Technology Solutions unit transaction, Tech Data and Avnet have announced their intention to develop a partnership with the goal of providing comprehensive world class IOT solutions.
For more information, visit www.avnet.com
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