Avnet, Inc. (AVT) has entered a definitive agreement to acquire Bell Microproducts Inc. (BELM) for $7.00 per share, amounting to $252 million. The total transaction value was $594 million after assuming a net debt position for Bell of $342 million as of December 31, 2009.
The transaction is expected to close in 60 to 120 days. The acquisition has been approved by the Boards of both companies and is subject to the approval of Bell’s shareholders as well as customary regulatory approvals.
Bell is a leading value-added distributor of storage and computing technology. The company has over 1900 employees and offers a broad suite of integration and support services to OEMs, VARs, system builders and end users through 55 offices in the United States, Canada, Europe and Latin America.
Bell recorded sales of approximately $3.0 billion in calendar 2009. Avnet expects that the acquisition will give an opportunity to develop business in storage and computing solutions along with expanding its presence in the fast-growing Latin America market.
Additionally, management stated that Bell’s position in datacenter products and embedded systems complements Avnet’s growth strategies and creates opportunities for cross selling. Avnet currently focuses on embedded computing. With Bell’s leading position in hard disk drive distribution, Avnet will also have exposure to this product segment which is currently focused on embedded computing.
Updated Guidance for Third Quarter
Avnet updated its guidance for the third quarter. The company now expects sales between $4.45 billion and $4.70 billion in the March quarter, up from the previous guidance of $4.10 billion and $4.70 billion. Sales from Electronics Marketing (EM) Group are projected around $2.75 billion – $2.85 billion compared to the prior range of $2.55 billion to $2.85 billion. Sales from Technology Solutions are forecasted between $1.70 billion and $1.85 billion, compared to the prior range of $1.55 billion – $1.85 billion.
Due to the higher revenues and an improved business mix, earnings per share (EPS) are now forecasted around 60 – 66 cents, up from the previous guidance of 53 – 61 cents. The EPS guidance does not include any potential restructuring charges or integration charges related to acquisitions.
The current Zacks Consensus Estimate is 58 cents. Based on the revised outlook provided by management, we expect revisions in the consensus estimate.
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Read the full analyst report on “BELM”
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