Avnet Continues Shopping Spree with Nippon Denso Acqusition

by: Tech Confidential December 02, 2008 | about stocks: AVT    
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Electronic components distributor Avnet Inc. (AVT) has unveiled plans to acquire Nippon Denso Industry Co. Ltd., a Tokyo-based company that helps OEMs design complex semiconductors and subsystems into their end products.

No terms were announced, but Merrill Lynch & Co. analyst Steven Fox in a note Monday estimates a price tag of no higher than $50 million. He says the deal would double Avnet's small presence in Japan, a market that has been notoriously difficult for U.S. component distributors to penetrate.

The deal follows an agreement struck by Avnet in October to acquire U.K.-based Abacus Group plc for $73 million in cash and $109 million in assumed debt. The company's strong cash position -- it has about $387 million in its pocket plus a $500 million available credit facility -- should help it continue to be a consolidator in the IT components distribution sector as more of its rivals struggle to raise credit.

Fox says he maintains a "buy" rating on Avnet shares in part because of the leading position the company has built in its market. - Olaf de Senerpont Domis

See Nov. 30 press release from Avnet
See Oct. 8 post on Avnet's Abacus deal from Tech Confidential

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