Avnet Builds Out EMEA Business with ACAL, Magirus Acquisitions

Published: October 18, 2007

by Timothy Prickett Morgan

IT reseller Avnet said last week that it has acquired two European resellers in an effort to build out its Technology Solutions distribution business. With these deals, the Technology Solutions unit will have sales in excess of $2.5 billion in EMEA, and Avnet will significantly increase its presence in the two largest IT markets in EMEA--the United Kingdom and Germany.

On September 27, Avnet paid £41 million (about $84 million at current exchange rates between British pounds and U.S. dollars) to acquire the IT Business Solutions unit of ACAL, a British distributor that wants to sell the solutions business so it can focus more on its electronics distribution business and pay off some debts. ACAL is headquartered in the United Kingdom, and has operations in Belgium, the Netherlands, in Scandinavia, Germany, France, Italy, and Spain. ACAL operates a document imaging and management business called Headway Technology, a storage networking hardware and software distribution business called ASNS, and an IT services business called AVAS that does services relating to the imaging and storage networking units.

The more relevant business, at least as far as server platforms are concerned, that Avnet recently picked up is the Enterprise Infrastructure Division of a company called Magirus, which is a $500 million value-added distributor of server and storage platforms made by IBM and Hewlett-Packard that Avnet acquired for an undisclosed sum on October 8.

The two deals bring Avnet 140 new employees in Europe and 1,300 new downstream resellers to peddle products, and adds Avnet presence in six new European countries, too, for its Technology Solutions unit. Roy Vallee, Avnet's chairman and chief executive officer, said that these two deals will make Avnet Technology Solutions as Europe's largest value-added IT distributor for enterprise products. The Technology Solutions unit is expected to post sales in excess of $6 billion in 2007, and operates in 30 countries.

Magirus Group, which is based in Stuttgart, Germany, has annual sales in the range of 700 million euros and over 600 employees (these figures are before the sale of its dominant unit to Avnet). The company has operations in every country in Western Europe as well as throughout the Middle East. Magirus does business in Asia and North America through a partnership with Agilysys, which was once a master server reseller and which in January of this year sold its IT distribution business to Avnet's rival, Arrow Electronics, for $485 million. So the Magirus sale will have an impact on the balance of power between Avnet and Arrow. Magirus was a reseller of IBM's System p and System i products in Europe, and also peddled both the X64-based ProLiant and Intanium-based Integrity server lines from HP; IBM, HP, and EMC storage arrays and related software were also part of the Magirus catalog.

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