Avnet to sell its IT business to Tech Data for $2.6 bn

US electrical components distributor Avnet Inc today struck a deal to sell its IT business to technology products distributor Tech Data Corp in a $2.6 billion in cash and stock deal.

Avnet, based in Phoenix, will receive $2.4 billion in cash and 2.8 million shares or 7 per cent of Tech Data, currently valued at about $200 million.

Avnet said it expects to realize a gain of $3.75 to $4.75 per share after the deal closes.

Tech Data expects to realize about $200 million in present value of tax benefits and also expects to generate about $100 million in annualised cost savings two years after the deal closes.

Avnet's Technology Solutions operating group is a global IT solutions distributor serving customers and suppliers in around 80 countries.

It provides next generation solutions, marketing, training, resources and services that span the cloud to the data center and encompass the entire IT lifecycle. They work with value-added resellers to make it easier and more affordable to enter and excel in high-growth technology and vertical markets locally and around the world.

Both companies said that the deal provides them with immediate opportunities to focus on core strategies and scale their respective businesses.

Founded in 1974 by Edward Raymund, Tech Data, a Fortune 500 company, is one of the world's largest distributors of IT products and services, generating annual sales of $27.7 billion sales.

The Florida-based company provides a broad range of product lines, logistics capabilities and value-added services to technology manufacturers and resellers like Apple, Cisco, IBM, HP, Lenovo, Microsoft, Sony, Symantec and VMware.

The company has grown through 18 acquisitions, Canada's ParityPlus, Paris-based Softmart International, Germany's Computer 2000 AG, Globelle Canada, UK-based Azlan Group, Actebis AG Switzerland, Nordics-based IT distributor Scribona, Netherlands-based Triade Holding B.V., Specialist Distribution Group (SDG), and Signature Technology Group.

Avnet, also a Fortune 500 company, is a business-to-business technology distributor and one of the largest global distributors of electronic components, computer products and embedded technology.