Avnet Partners With Calence On Spin-off

The deal comes just one day after Avnet sold its $100 million Hewlett-Packard end-user sales organization to Logicalis, which now means that Avnet will focus almost exclusively on tier-two distribution in the United States. AES specialized in network life-cycle management solutions for IP communications, security, wireless and LAN/WAN, selling directly to commercial end-user accounts.

The new company, Calence LLC, will be headquartered in Phoenix and jointly owned by Avnet and Calence, said Calence CEO Michael Fong, who will also head the newly formed company. Current AES employees will move over and work for the new organization, joining current Calence employees. Fong said the deal with Avnet makes the new company the largest pure-play network solution provider in the United States with about 400 networking professionals located in 20 offices with a combined annual revenue of about $300 million. “This was a huge opportunity to create a total soup-to-nuts networking solution provider,” Fong said, adding the long-range plan is to take the new company public.

As part of the deal, the new company also has signed a five-year network business process outsource agreement to manage Avnet&'s data and voice networks and telecommunications expense management support.

Steve Tepedino, president of Avnet Technology Solutions, Americas, said that both Calence and AES shared similar skill sets within the respective companies but that Calence focused on commercial accounts while AES focused primarily on K-12 public sector accounts. “The combination of the two companies creates real balance,” he said.

He noted that Avnet will have seats on Calence LLC&'s board but won&'t have a controlling interest and will hold no voting shares. He said that it was important for Calence LLC, as a VAR, to be completely independent from Avnet&'s distribution operations.

Tepedino said that the timing of the Logicalis and Calence deals were “purely coincidental” and didn&'t signal a deliberate plan by Avnet to exit the tier-one business in the United States. Rather, the deals represented opportunities for Avnet to work with strong solution provider partners, which, he said, is the best way to approach the U.S. market.

Internationally, he said that Avnet would continue to pursue both tier-one and tier-two business opportunities as market conditions dictate.