Avnet looking for $60m annual savings following Bell purchase
Avnet is looking to make cost savings of $50-60m a year from its acquisition of Bell Microproducts by minimising overlapping operations.
It is likely that Avnet will sell
Bell
's end-user businesses ProSys and Total Tec and look to cut out a chunk of cost from the remaining distribution arm, the business confirmed in a teleconference with financial analysts.
"At this point we have not developed the detailed integration plans however based on our past experiences and a top down analysis, our current estimation is for roughly $50-60m of expense synergies," said Avnet boss Roy Vallee.
Both firms have "reduced op-ex considerably" during the global recession he said but added there were overlaps between the companies where it hoped to eek out savings.
"In reality, in past transactions where we have fullyintegrated the business we have achieved between 30% to 35% cost reductionsfrom the acquired business or of the acquired business," said Vallee.
This does mean that all the cost will be drawn from theacquired business but from the duplicated areas of the combined organisations.
Vallee confirmed the reductions would come from sales,general and administrative (S,G&A) expenses.
Don Bell, who founded the company 22 years ago, will remainwith the firm during the integration at least, "I will be active for a while oras long as they want me."
The integration, the biggest that Avnet has taken on in itshistory will be significant, the combined real estate that both companies havein the
UK
alone spans 10 locations.
Across
Europe
, both firmsoperate three ERP systems each and consolidating these will be a multi-millionpound exercise.
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