See: Avnet buys Abacus for £42.2m

What is Avnet buying?

Avnet’s £42.2m takeover bid for Newbury-based component distributor Abacus should surprise no one as business consolidation has been a fact of life in the European distribution business for a number of years.

And Avnet has also been keen to spot opportunities in the UK market. In 2005 it acquired Memec and in January this year it added Azzurri Technology.

So what is the $18bn US broadliner getting for its £42m?

Abacus is one of the UK’s longest established distributors having being founded in 1972. It currently employs approximately 1,000 staff.

In terms of adding new business to Avnet’s bottom line, Abacus Group’s annual sales are about the £250m mark. Abacus reported sales of £139.1m and profit of £34.3m for the six months to March 2008.

As well as the main Abacus broadline distribution business, which has a long franchise list that includes some of the industry’s biggest brands, such as Texas Instruments, STMicroelectronics, Toshiba and Tyco, there are three technology focused businesses.

These are Abacus Embedded, Trident Displays and TDC, which are specialists in embedded wireless applications.

Abacus Embedded is a large Microsoft Embedded distributor, covering Europe, Middle East and Africa, and the European distributor for Microsoft Retail Management System (RMS).

It is likely that all three of these specialist businesses will be of interest and have strategic importance to the new owner.

Most recently Abacus teamed up with LED lighting specialist Osram to create a distribution business division to address the solid state lighting market. Called AbacusLED, the venture will market the Osram range of discrete LEDs and LED lighting systems together with electronic driver and thermal management technologies.

Despite the relative strengths of these specialist businesses, the group as a whole had been finding it difficult to compete.

In part this was due to its lack of a strong business outside of Europe. Being part of Avnet should change that.

A multi-million pound upgrade of the company’s IT system is due to start. This may now be reviewed and savings made with Abacus being linked into Avnet’s established global IT system.

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