Components distributor Abacus has fallen to Avnet in a £42m cashdeal after failure to execute on a planned acquisition strategy meant it putitself up for sale last month. Avnet had already been linked to a possibletakeover bid after tough trading conditions lead to a rapid slide in Abacus’stock and profits.
Abacus chairman Anthony Westropp said that the directorsbelieved that the low share price and high level of borrowings meant that thefirm had been forced to ditch its “preferred” buy-and-build strategy.
Avnet CEO Roy Vallee talked up the “exciting opportunities” thatAbacus’ business opened up for the Avnet machine.
Vallee brushed off concerns over the timing of theacquisition, which has come in the midst of a terrible week on the markets,saying: “Our financial strength affords us the opportunity to acquire companieslike Abacus despite current conditions in the credit markets. Usingconservative business case assumptions, we believe that we will achieve ourstated return on capital targets following the completion of the integration.”
In August Avnet reported that its buy-and build strategy waspaying off as the distributor posted full-year revenues of just under $18bn. SinceJuly 2007 it has bought Magirus’ enterpriseinfrastructure division, ACAL’s IT solution business unit and HorizonTechnology.