Tech Data CEO talks credit, debt - and mouse mats - in wake of Avnet TS deal

Bob Dutkowsky claims Avnet was the deal his firm wanted to do above all others as he talks to CRN sister publication Channelnomics Europe

Following on from today's blockbuster news that Tech Data is acquiring Avnet Technology Solutions for $2.6bn, CRN sister publication Channelnomics Europe asked Tech Data CEO Bob Dutkowsky to talk credit lines, debt, and why mouse mats are still an important business.

A lot of resellers will have big credit lines with both Tech Data and Avnet. Can you offer any words of reassurance for those in the channel worried this might be bad news for their business?
It is very important to know that this transaction is not scheduled to close until next year. Between now and some time early next year nothing changes, and it is business as usual. Between now and when the transaction closes, there is lots of work to be done to figure out how best to integrate the companies together to create the broadest and most complete set of support offerings to the channel of any distributor in the world. Credit is one of the very important value propositions that we bring to the channel. Both of the companies do so, and we will be spending a lot of time on the credit capacities of both companies. Suffice it to say that we know that credit is something that is very important to the channel.

Was buying Avnet TS in any way reactive to the Ingram buyout earlier this year?
I can honestly tell you that the Ingram [acquisition] had nothing to do with this. This process started last year, before the Ingram deal even became apparent. This deal is simply in the best interests of our employees, shareholders, partners, and customers.

Tech Data CEO talks credit, debt - and mouse mats - in wake of Avnet TS deal

Bob Dutkowsky claims Avnet was the deal his firm wanted to do above all others as he talks to CRN sister publication Channelnomics Europe

You have mentioned that this was an unsolicited approach. How did you sell the idea to Avnet?
I can tell you that it was unsolicited. We had been studying this for a while, [and what it would mean] for vendor partners, shareholders, and employees. Avnet had not been considering it, so they asked if they could have some time to think about it. They spent some time with their board and outside investors and it took them several months to come to the conclusion that this was potentially an attractive thing to do, and it accelerated in late spring of this year. It has been a long journey.

There are few, if any, other targets in the same bracket as Avnet. Did you have a plan B?
A well-run company always does - we had a B, C, D, and an E. But this transaction was A-plus - this was the one that we wanted to do. We really believed that it served the best interests of all stakeholders [on both sides]. But well-run companies never go into anything without a back-up plan.

The acquisition will give two already significant players a boost in market share. In the mid-term can the merged entity continue to take further share from there?
It is way too early for us to think in those terms. Right now we are making sure that we are working really hard to articulate to our stakeholders what this deal means, that is our focus. We are now able to serve the IT space from end to end, from the smallest of technology products - such as print cartridges and mouse pads - right across the whole continuum.

Tech Data CEO talks credit, debt - and mouse mats - in wake of Avnet TS deal

Bob Dutkowsky claims Avnet was the deal his firm wanted to do above all others as he talks to CRN sister publication Channelnomics Europe

This acquisition boosts your standing in the datacentre, but is the other end of that continuum - such as mouse mats and print cartridges - still strategically important?
Yes, it is about the end to end - I will give you an example. If the smartphone that you have in your hand is not connected to a network, or if it does not have apps, it is just an isolated device. When it connects to things, those things are datacentres. Through the expansion of our datacentre business - which is already an $8bn business - we can really bring together that high end of the computing continuum and put that computing power in the smartphone in your pocket. The definition of computing is rapidly changing, and so that end-to-end capability [is important]. We do not really care where the computing goes - whether it is in your pocket, or in the datacentre. We think that that is the distributor of the future - it is not going to be someone that does one segment. It needs to be global, and it needs to have no boundaries. We have a vision for what a distributor needs to look like over the next decade, and we think that Tech Data plus Avnet equals that distributor.

This acquisition will see you taking on new debt and financial commitments - are you confident that those will not limit your ability to invest in high-growth areas?
The transaction will be very accretive for our shareholders. Yes, we have had to borrow some money to make this acquisition, but we have a plan to pay that down as rapidly as we can. We have very little debt on our balance sheet, and we have been able to use relatively inexpensive money to make a very strategic investment for the future of the company.