Factoring in Bell's net debt of $342m, the all-cash merger carries an overall value of $594m. Both boards of directors have given the deal the green light and, subject to approval from regulators and Bell shareholders, the deal is expected to close in two to four months.
Avnet claims the deal will generate at least a 12.5 per cent return on capital employed, once integration is complete. Bell, which has worldwide sales of about $3bn, employs 1,900 people in 55 offices across the globe. About 15 per cent of the firm's turnover is from its resale business.
For the year ended 27 June 2009, Avnet posted sales of $16.23bn, down from $17.95bn the previous year.
The distributor's chief executive Roy Vallee said: “We are very excited about the opportunity to build additional scale and scope in storage and computing solutions as well as increase our presence in the fast-growing Latin America market. Bell’s position in datacentre products and embedded systems complements Avnet’s current strategies and creates opportunities for cross-selling.
"Bell’s position as one of the leaders in hard disk drive distribution substantially increases Avnet’s exposure to this product segment which is currently focused on embedded computing. In support of our focus on value-added solutions distribution in North America, we intend to explore strategic alternatives for the single tier reseller business."
Bell Micro chief executive Don Bell added: “This transaction delivers excellent value to our shareholders while providing an enhanced platform from which our employees can continue Bell’s heritage of helping suppliers reach our served markets with increasingly complex solutions.
"Given the rising demands of global technology markets, the investment required to deliver leading edge technical support and competitive supply chain networks continues to grow. Avnet’s financial resources and global infrastructure will allow the Bell organisation to deliver industry-leading value to our customers and continue our long history of growth and market share gains.”
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