Avnet-Bell mega-deal raises integration questions

Distribution rivals ponder the integration of Bell Micro into Avnet

Down the track: rival distributors are curious as to how the integration of the two firms will work

Avnet’s acquisition of Bell Micro has sparked a wave of speculation as to how the two businesses will integrate.

The distribution behemoth scooped up Bell for an overall value of $594m (397m), factoring in Bell’s net debt of $342m, claiming it was its biggest acquisition to date.

Subject to regulatory and shareholder approval the deal is expected to close within 60 to 120 days of the acquisition date.

But Bell's shareholders were quick to voice their concerns, tasking Kendall Law Group with investigating the deal'ss fairness value.

However, Don Bell, chief executive of Bell Micro, said: "This transaction delivers excellent value to our shareholders."

Roy Vallee, chief executive of Avnet said at the time that the acquisition will help Avnet grow its Latin American presence, a region in which Bell agreed a distribution agreement with Dell just last month.

Bell's position in datacentre products and embedded systems “complements Avnet’s current strategies” and creates opportunities for cross-selling," he added.

Details of how the two distributors would be combined were scant, although Vallee hinted last week that the brand name is likely to be integrated into Avnet. Rivals have hinted that the inegration process could prove a challenge.

Ian French, leader of Azlan UK, said: "It is hardly a surprise that we are seeing consolidation, particurlarly for a struggling distributor such as Bell. I will watch with interest what will happen as Avnet attempts to integrate yet another company."

David Galton-Fenzi, group sales and marrketing director at Zycko, said: "The biggest shake-out willl be whether Avnet maintains all the contracts, as some of them directly conflict. The sales teams are not friendly either - how will they manage the accounts? We see this as an opportunity."

David Ellis, e-security director at Computerlinks, said: "Getting one and one to equal three, and not less than two, is the challenge. If the cultures are not the same, they could lose some key staff."

Others wondered whether some parts of the business would keep going.

Alex Tatham, sales director at Westcoast, said: “It is very exciting news for both Bell and Avnet. However I’m not sure of Avnet’s desire for a volume business.”