Avnet Inc. (AVT, Financial) filed Quarterly Report for the period ended 2010-10-02.
Avnet Inc. has a market cap of $4.54 billion; its shares were traded at around $30.21 with a P/E ratio of 10.7 and P/S ratio of 0.2. AVT is in the portfolios of Robert Rodriguez of FPA Capital, First Pacific Advisors of First Pacific Advisors, LLC, Arnold Schneider of Schneider Capital Management, Richard Pzena of Pzena Investment Management LLC, Columbia Wanger of Columbia Wanger Asset Management, John Buckingham of Al Frank Asset Management, Inc., NWQ Managers of NWQ Investment Management Co, Paul Tudor Jones of The Tudor Group, Louis Moore Bacon of Moore Capital Management, LP, Pioneer Investments, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Kenneth Fisher of Fisher Asset Management, LLC, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates.
Unidux, a Japanese publicly traded company, was acquired through a tender offer in which the Company obtained over 95% controlling interest. The non-controlling interest was recorded at fair value but was not material. The acquisition of the non-controlling interest in Unidux is expected to be completed during the second quarter of fiscal 2011. As mentioned, Unidux was a publicly traded company which shares were trading below its book value for a period of time. In the tender offer, Avnet offered a purchase price per share for Unidux that was above the prevailing trading price and represented a premium to recent trading levels. Even though the purchase price was below book value, 95% of the Unidux shareholders tendered their shares. As a result, the Company recognized a gain on bargain purchase of $30,990,000 pre- and after tax and $0.20 per share on a diluted basis. Prior to recognizing the gain, the Company reassessed the assets acquired and liabilities assumed in the acquisition.
On July 6, 2010, subsequent to fiscal year 2010, the Company completed its previously announced acquisition of Bell, a value-added distributor of storage and server products and solutions and computer components products, providing integration and support services to OEMs, VARs, system builders and end users in the US, Canada, EMEA and Latin America. Bell operated both a distribution and single tier reseller business and generated sales of approximately $3.0 billion in calendar 2009, of which 42%, 41% and 17% was generated in North America, EMEA and Latin America, respectively. The consideration for the transaction totaled $255,691,000 which consisted of $7.00 cash per share of Bell common stock, cash payment for Bell equity awards, and cash payments required under existing Bell change of control agreements, plus the assumption of $323,321,000 of Bell net debt. Of the debt acquired, Avnet repaid approximately $209,651,000 of debt immediately after closing. The Company is integrating Bell into both the EM and TS operating groups and expects significant cost saving synergies upon completion of the integration activities, which are anticipated to be completed by the end of fiscal 2011.
The Company recognized certain contingent liabilities as part of the purchase price allocation which were recorded to the extent the amounts were probable and reasonably estimable because the fair value was not determinable. The total preliminary contingent liabilities recorded were not significant. As mentioned previously, certain contingent liabilities are still being evaluated from information available in order to determine if an amount that is reasonably possible should be recorded. As a result, since amounts have not yet been recorded, it is possible that adjustments may be recorded in future quarters during fiscal 2011. In addition, the Company acquired accounts receivable which were recorded at the estimated fair value amounts; however, adjustments to acquired amounts were not significant as book value approximated fair value due to the short term nature of accounts receivables. The gross amount of accounts receivable acquired was $381,805,000 and the fair value recorded was $363,524,000, which is expected to be collected.
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Avnet Inc. has a market cap of $4.54 billion; its shares were traded at around $30.21 with a P/E ratio of 10.7 and P/S ratio of 0.2. AVT is in the portfolios of Robert Rodriguez of FPA Capital, First Pacific Advisors of First Pacific Advisors, LLC, Arnold Schneider of Schneider Capital Management, Richard Pzena of Pzena Investment Management LLC, Columbia Wanger of Columbia Wanger Asset Management, John Buckingham of Al Frank Asset Management, Inc., NWQ Managers of NWQ Investment Management Co, Paul Tudor Jones of The Tudor Group, Louis Moore Bacon of Moore Capital Management, LP, Pioneer Investments, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Kenneth Fisher of Fisher Asset Management, LLC, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
During the first quarter of fiscal 2011, the Company acquired three businesses: Bell Microproducts Inc. (Bell), which is described further below; Tallard Technologies, a value-added distributor of IT solutions in Latin America with annualized revenues of approximately $250 million, which is reported as part of the TS Americas region; and Unidux, Inc., (Unidux) an electronics component distributor in Japan with annualized revenues of approximately $370 million, which is reported as part of the EM Asia region.Unidux, a Japanese publicly traded company, was acquired through a tender offer in which the Company obtained over 95% controlling interest. The non-controlling interest was recorded at fair value but was not material. The acquisition of the non-controlling interest in Unidux is expected to be completed during the second quarter of fiscal 2011. As mentioned, Unidux was a publicly traded company which shares were trading below its book value for a period of time. In the tender offer, Avnet offered a purchase price per share for Unidux that was above the prevailing trading price and represented a premium to recent trading levels. Even though the purchase price was below book value, 95% of the Unidux shareholders tendered their shares. As a result, the Company recognized a gain on bargain purchase of $30,990,000 pre- and after tax and $0.20 per share on a diluted basis. Prior to recognizing the gain, the Company reassessed the assets acquired and liabilities assumed in the acquisition.
On July 6, 2010, subsequent to fiscal year 2010, the Company completed its previously announced acquisition of Bell, a value-added distributor of storage and server products and solutions and computer components products, providing integration and support services to OEMs, VARs, system builders and end users in the US, Canada, EMEA and Latin America. Bell operated both a distribution and single tier reseller business and generated sales of approximately $3.0 billion in calendar 2009, of which 42%, 41% and 17% was generated in North America, EMEA and Latin America, respectively. The consideration for the transaction totaled $255,691,000 which consisted of $7.00 cash per share of Bell common stock, cash payment for Bell equity awards, and cash payments required under existing Bell change of control agreements, plus the assumption of $323,321,000 of Bell net debt. Of the debt acquired, Avnet repaid approximately $209,651,000 of debt immediately after closing. The Company is integrating Bell into both the EM and TS operating groups and expects significant cost saving synergies upon completion of the integration activities, which are anticipated to be completed by the end of fiscal 2011.
The Company recognized certain contingent liabilities as part of the purchase price allocation which were recorded to the extent the amounts were probable and reasonably estimable because the fair value was not determinable. The total preliminary contingent liabilities recorded were not significant. As mentioned previously, certain contingent liabilities are still being evaluated from information available in order to determine if an amount that is reasonably possible should be recorded. As a result, since amounts have not yet been recorded, it is possible that adjustments may be recorded in future quarters during fiscal 2011. In addition, the Company acquired accounts receivable which were recorded at the estimated fair value amounts; however, adjustments to acquired amounts were not significant as book value approximated fair value due to the short term nature of accounts receivables. The gross amount of accounts receivable acquired was $381,805,000 and the fair value recorded was $363,524,000, which is expected to be collected.
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