Emerson's $1.2 Billion Avocent Purchase Worries Some Partners

While Wall Street cheered Emerson's acquisition of Avocent -- the news sent Avocent's stock up 21.2 percent Tuesday -- some resellers grew worried and made calls to competing vendors.

With the $1.2 billion acquisition, Emerson will use Avocent's software package to build out its data center solutions, hoping to take advantage of what is a $1 billion-plus industry. Currently, less than 40 percent of Emerson's Network Power Business serves the data center business. The deal also gives Emerson access to Avocent marquee OEM accounts with powerhouses such as IBM, HP and Dell.

Emerson said it intends to integrate the company into its Network Power business over the next nine to 12 months. Spokespeople at both Emerson and Avocent said the deal is too new to offer further detailed clarification, and that details are still being thrashed out, and that has resellers worried.

One Emerson partner who did not want to be named, said that he is sitting back and watching for now.

"I'm taking a wait-and-see approach," he said. "Will there be a channel collision? Probably. Does this mean more money in the pockets of either resellers? I really don't know at this point, but I'm worried."

On the other side of the table, some Avocent resellers are concerned about product overlap, such as console servers from Avocent and Emerson, and what will happen to partners should one of those products go away.

It's a scenario that has scared some Avocent resellers into making calls to competing vendors, which is great news for companies such as OpenGear, one of Avocent's top rivals.

"I've had about a dozen calls today from Avocent resellers," said Todd Rychecky, vice president of sales and marketing at Littleton, Colo.-based OpenGear. "They're concerned about availability -- we make similar products as Avocent -- and they're asking if we will be able to supply them, and we definitely can."

To Rychecky, this is a great opportunity to build OpenGear's channel. Right now the company has roughly 100 resellers in the U.S. and 25 in Europe.

Doris Yeh, director of sales at San Jose, Calif.-based Mirapath, does business with both Avocent and OpenGear. Yeh has a positive take on the Emerson's Avocent purchase.

"There's always general concern when there's an acquisition," Yeh said. "We don't know how a company is going to treat the channel, but we're going to trust Avocent. They've treated us well so far, and we didn't have any problems when they acquired Cyclades."

Emerson and Avocent hope to sew up the acquisition in January 2010, pending regulatory and shareholder approval. Spokespeople for the companies said it has not been determined if changes will occur in upper management.

Tweet

   

More Components & Peripherals