Avnet Inc.'s agreement to sell its technology solutions operating group to Tech Data Corp. in a stock and cash transaction valued at $2.6 billion represented not only the biggest M&A deal in distribution last month but also a major shift in the electronics market.
Technology distributors are in a "consolidation craze," driven primarily by the rapid growth of cloud-based solutions, including Amazon Web Services and Google Compute Cloud, according to a recent Fortune article.
"Consolidation is hitting tech distributors just as it has hit legacy technology vendors," including deals involving Dell and Ingram Micro, according to the article.
And it will shake up next year's list of the top electronics distributors. Technology solutions accounted for about 37 percent of Avnet's sales in fiscal 2016, so the company is sure to lose ground to current No. 2, Arrow Electronics.
But the move "presents us with the best strategic path for Avnet’s future success and profitability, and puts Technology Solutions in position to achieve breakthrough business results with Tech Data," said William Amelio, Avnet CEO. "Moving forward, Avnet will focus its resources and investments on becoming a leader in design chain and supply chain services not only for our current customers and suppliers, but also for new markets."
The other big M&A story from last month was a deal that got called off.
Praxair Inc. and Linde AG terminated preliminary discussions for a potential merger when shareholder representatives on Linde's supervisory board recommended ending the talks, a move agreed to by Linde's CEO.
But a recent Bloomberg article hinted at a possible rekindling of merging the two gases giants, with Bernstein analyst Jeremy Redenius writing in a note to clients, "Praxair thinks Linde needed to sort out some internal issues before continuing. They don't see irreconcilable differences as they didn't get that far in the negotiations."
Here are other key deals that occurred in September 2016:
MORSCO Agrees to Acquire Fortiline
FCX Performance Acquires RL Stone
Air Hydro Power Acquires Total Hose Inc.
