Avnet Announces Agreement to Purchase Memec Group

May 04, 2005 by Jeff Shepard

Avnet Inc. (Phoenix, AZ) announced that it has reached an agreement to purchase Memec Group Holdings Ltd. The deal is a stock and cash transaction that is valued at roughly $676 million. In the agreement, Avnet will assume about $194 of Memec’s net debt. The purchase will give Avnet further reach into the design end of the components business, and will allow it to compete in the Japanese and Chinese marketplace.

As part of the deal, Memec investors will receive a total of approximately 24 million shares of Avnet common stock plus approximately $64 million in cash. The transaction is expected to generate annual synergies of roughly $130 million in cost savings, which includes $10 million in reduced interest expense. The gain is expected to accredit to earnings immediately, while the closing for the transaction will occur 60 to 90 days from the late-April announcement. The deal will bring Avnet about 20 additional suppliers. The combined entity will have operations in 69 countries and anticipated annual sales of more than $8.5 billion.