Avnet Expands in Latin America, Promotes COO to President

Published: July 12, 2010

by Timothy Prickett Morgan

If you are chasing growth, as all companies along the IT supply and distribution chain are, then Latin America is one of the goals you are running toward. Which is why master distributor Avnet has acquired Tallard Technologies, a value-added distributor located in Miami, Florida, that has presence in all of the important Latin American countries.

The Tallard business was a division of Itautec S.A.-Grupo Itautec, which at $1 billion is one of the largest private companies in Brazil. Itautec is a supplier of computers and software aimed at the banking and financial services industry, as well as its own Linux distribution, called Librix, which it uses internally for its application software. Tallard maintained the relationships with the server, storage, and PC vendors that allowed Itautec not only to get computers for its customers, but also to make money in the broader IT distribution racket. Tallard operates subsidiaries or affiliates in Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, and Venezuela, and distributes servers and storage made by IBM, storage from NetApp, and PCs and other devices from Apple.

Itautec did not give its reasons for exiting the IT distribution business, but plenty of relatively large and small resellers have sold out to either Avnet or its main rival in IT and electronics distribution, Arrow Electronics, in the past decade. It is a tough, tough business, and after two recessions, IT vendors want all the big accounts and their juicy profits for themselves. The ever-growing master distributors and their influence in the IT market all no doubt contributed to Itautec's decision to focus on its software and tech support businesses and sell all the stock in its Tallard technologies reseller biz to Avnet.

Tallard has 150 employees, operates in 30 countries, has what Avnet called "an extensive reseller base," and posted around $250 million in sales in 2009. So Tallard it is not a small potato by any means. The business will be integrated into the Technology Solutions unit at Avnet and immediately boost its profits. The acquisition price was not disclosed, but will no doubt be divulged after the deal is completed in July as part of a filing that Avnet makes with the Securities and Exchange Commission. It is not clear if the offering of $300 million in notes on June 22 by Avnet was done to pay for the Tallard acquisition or was done for some other purpose.

In a separate item, Avnet said that it has promoted Rick Hamada, who has been the company's chief operating officer since July 2006, to the additional post of president of Avnet. Roy Vallee remains chief executive officer and chairman of the master distributor. Prior to his COO role, Hamada ran the Technology Solutions group for many years, building it up and bolstering its profits.

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