Making its third acquisition in three months, Arrow Electronics plans to buy the assets of Agilysys KeyLink Systems Group, a distributor of enterprise IBM and Hewlett-Packard products.
Under the terms of the deal, Arrow will pay Agilysys $485 million in cash and enter a long-term procurement deal with Agilysys' Enterprise Solutions Group reseller arm. The deal is expected to be completed within 90 days, the companies said.
Last month, Melville, N.Y.-based Arrow agreed to buy InTechnology, a $400 million U.K. distributor of storage and security solutions. And in November, Arrow closed its $80 million acquisition of Alternative Technology, a specialty distributor based in Englewood, Colo. Alternative's 2006 sales were about $300 million.
Cleveland-based KeyLink has about 500 employees and sells to roughly 800 solution providers. Its pro forma sales for 2006 were about $1.6 billion, including revenue associated with the procurement agreement, according to the companies.
"With this acquisition, we will become the leading distributor of enterprise products for both [IBM] and [HP], as well as the leading value-added distributor of storage and software," Arrow Chairman and CEO William Mitchell said in a statement. "KeyLink is a natural complement to our existing enterprise computing solutions business with its value-added approach and its resellers' focus on small and medium-sized customers."
Arrow intends to keep all of KeyLink's field-sales positions intact to ensure a smooth transition with solution providers, said Catherine Morris, president of Arrow Enterprise Computing Solutions.
Agilysys will focus on its remaining single-tier business, according to Agilysys Chairman and CEO Arthur Rhein. "As a result of this transaction, both Agilysys and Keylink will be better-positioned to achieve their full potential as Agilysys focuses solely on growing its information technology solutions business. We wish Arrow well as they continue to grow their business," Rhein said in a statement.
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