Avnet Places $908M Bid for British Distributor to Strengthen Industrial IoT Practice

Avnet has struck a deal to purchase a $1.19 billion electronic components distributor to better target the industrial Internet of Things market with edge-to-enterprise products and solutions.

The Phoenix-based distributor said its $908.4 million offer for Leeds, U.K.-based Premier Farnell and its online services would dramatically accelerate Avnet's digital capabilities, providing the company with stronger pure-play offerings in both the broad-line and high-value space.

"This acquisition will significantly strengthen Avnet's digital footprint worldwide," Bill Amelio, Avnet's interim CEO, said in a statement. "The convergence of Premier Farnell's innovative online services with Avnet's world class supply chain will create customer service unparalleled in the industry."

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Avnet's all-cash offer of $2.43 per share represents a 12.1 percent premium over Datwyler Technical Component's June 14 offer of $2.17 per share. Avnet approached Premier Farnell about a possible competing bid after the Datwyler offer was announced. Premier Farnell's board of directors has accepted Avnet's offer.

Premier Farnell's stock climbed 18.4 percent Thursday after the deal was announced to $2.56 per share, while Avnet's stock was up 0.7 percent Thursday at $41.11 per share.

The acquisition is subject to approval by Premier Farnell shareholders and an English court, as well as regulatory approvals in the European Union, United States and Israel. Premier Farnell employs approximately 3,600 people across 38 countries in North America, Europe and Asia-Pacific.

"Premier Farnell will bolster our strategy to provide a differentiated digital experience from product ideation through its lifecycle," Gerry Fay, global president of Avnet Electronics Marketing, said in a statement.

Avnet said it intends to enter into discussions with Premier Farnell's senior management regarding their continuing involvement with the company, though no such agreements or arrangements are currently in place. The acquisition will also boost Avnet's profitability immediately upon completion, the distributor said.

The company declined to comment further.

Lumenate, an Avnet partner, sees the acquisition bid as an effort to support cloud-focused partners as they move into analytics and machine data and encounter customers who require higher levels of expertise, said Jamie Shepard, senior vice president of health care and strategy for the Addison, Tex.-based company, No. 152 on the CRN Solution Provider 500.

"Avnet is trying to bring two different worlds together," Shepard told CRN. "IoT is not data center, though you can't do one without the other."

Shepard said Avnet's IoT portfolio is evolving, and although it's still unclear where some of the pieces fit, the distributor is attempting to bring its IT solution providers into IoT in phases. The Premier Farnell acquisition will provide Lumenate with another opportunity to leverage what it has already built for the data center.

"Avnet is making some bold moves," Shepard said. "They have to position themselves for the future."

Premier Farnell's most recent high-profile contract was for building and distributing the Raspberry Pi, a tiny computer designed by a British nonprofit that retails for as little as $5. The bare-bones device has attracted attention for its price and potential to get children hooked on computing and coding, according to The Wall Street Journal.

Raspberry Pi uses the free Linux operating system and looks like a credit-card-sized circuit board that can be connected to a power supply, keyboard, mouse and monitor or TV. Premier Farnell is one of two licensed distributors of Raspberry Pi, and has developed a separate revenue stream by selling accessories for them.

Avnet's acquisition bid comes on the heels of some major restructuring for the distributor. Avnet announced earlier this month that Rick Hamada was stepping down after more than five years as CEO and would be replaced on an interim basis by former Lenovo CEO Bill Amelio.

And earlier this week, the distributor's technology solutions business announced it was rolling out business units with dedicated staff around data center, cloud, security, analytics, mobility and education to accelerate growth of software-driven technologies.