Avnet snaps up JBA US distribution arm

IBM alterations to its channel strategy forces sale to components operation.

Software vendor and IBM AS/400 reseller, JBA Holdings, has sold its two-tier hardware distribution arm in the US to components distributor Avnet, for up to $24 million.

JBA, based in Birmingham, decided to offload the distribution operation because it did not wish to take on more inventory responsibilities from its principal supplier IBM. The final figure has not yet been finalised.

David Williams, finance director at JBA, said a year of discussions within the company followed Big Blue's decision to farm out more configuration and inventory to the channel. It was agreed the computer systems division (CDS) would be sold off as there were insufficient resources to sustain the strategy.

He added: 'IBM changed things, from drop ship to configuration, within the channel. We were almost moving into manufacturing, which didn't suit our core business.'

According to Williams, JBA operates a two-tier distribution model only in the US and Canada. It resells IBM AS/400 and RS/6000s direct to corporate customers in the UK, in conjunction with its own System 21 ERP software.

Roy Vallee, chairman and chief executive of Avnet, said in a statement it will incorporate JBA CSD into its computer marketing group and continue to distribute JBA software via its North American reseller channel, as well as its own.

The purchase is intended to boost Avnet's IBM midrange operation, which includes Hamilton Hall-Mark.

CHS Electronics has been singled out as the prospective buyer for Pinacor, the distribution arm of US reseller MicroAge, following months of deliberation by MicroAge to devise a separate shareholder base for the division.

A decision by the reseller regarding the fate of its distributor has been postponed from the end of last year to 13 January, the date it is scheduled to disclose fourth-quarter results.

CHS posted net sales of $1 billion in December 1998, according to a trade statement issued last week. Claudio Osorio, chairman and chief executive of CHS, said this was the first time it had been attained in one month and compared the figure to total sales of $936 million in 1995.