Tech Data Corporation (NASDAQ: TECD)
reached a deal with Avnet, Inc. (NYSE: AVT)
enabling it to buy the latter's Technology Solutions business. The transaction comprises cash component of $2.4 billion and 2.785
million shares of Tech Data resulting in a total value of about $2.6 billion.
Tech Data expects the transaction to be accretive to its adjusted EPS significantly in the first full year of operations. The
company also sees $100 million cost synergies per year in two years after the closure of the transaction.
The company expects to fund the acquisition from cash on hand and debt under its revolving facility. The transaction is expected
to be completed by the first half of next year.
Commenting on the acquisition, CEO Bob Dutkowsky said, "This combination complements our value-added distribution capabilities
in Europe and the Americas, while establishing Tech Data's presence in Asia-Pacific, which will be a new market for us."
Tech Data is confident of improved value proposition from the transaction since it would better positioned to capture
opportunities in next-generation technologies to deliver differentiated value to its customers and vendor partners. The company
indicated that the move would enable generate strong returns for its shareholders.
While Tech Data closed at $69.34, Avnet finished Friday's trading at $39.21.
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