Arrow feels impact of lawsuit

Arrow Electronics is being sued by the former owners of one of its acquisitions for allegedly not sticking to the terms of the sale agreement.

The previous owners of Support Net, an IBM mid-range distributor, have filed a $462 million lawsuit and are seeking an injunction against the US distribution giant to prevent it from selling the business to a third party.

Henry Camferdam and Jeffrey Adams, who sold their controlling interest in Support Net in October 1997, also alleged that Arrow withheld financial information and mismanaged the unit, devaluing it.

The pair, who retained an 49.88 per cent interest in SupportNet, are seeking $162 million in compensatory damages and $300 million in punitive damages.

According to the suit, filed in the New York District Court on 23 March, Arrow received a $600 million cash offer from CHS to purchase its Gates/Arrow Distributing arm, into which Support Net has been incorporated. It is understood that an agreement was imminent.

However, the lawsuit will seek to prevent the deal, until Camferdam and Adams can determine the value of their stake in any proposed sale.

Robert Klatell, vice president of Arrow, said in a statement last week that the company would vigorously defend itself against all charges.

According to the plaintiffs' lawyers, there will be a hearing on 9 April on the injunction request.

The lawsuit arrives in the wake of restructuring at Gates/Arrow to incorporate its government, ISV and national sales accounts divisions to reflect changing customer and vendor needs. According to the company statement, this will allow Gates/Arrow to continue its integration without losing the established identities of its units.