Electronics parts distributor
Arrow Electronics, Inc.
) recently announced that it has settled its long-standing
dispute with E.ON SE and VEBA Electronics LLC.
Arrow entered into a settlement agreement with E.ON SE and
VEBA Electronics LLC for certain disputes, which originated after
Arrow acquired Wyle Electronics from the VEBA Group 12
In August 2000, Arrow acquired Wyle Electronics and thereby
assumed its outstanding liabilities, which included
responsibility for environmental problems at two previously owned
sited of Wyle. The two sites were Norco, California and
Huntsville, Alabama. To date, Arrow has spent approximately $45.0
million for these environmental issues.
Hence, Arrow sued E.ON AG in the Regional Court in Frankfurt,
Germany as the latter although acknowledged liability with
respect to the Norco and Huntsville sites and made a small
initial payment; it refused to make further payments
As per the settlement agreement, all litigations among Arrow,
E.ON and VEBA, including all claims and counterclaims before the
District Court of Frankfurt am Main in Germany, will be
dismissed. This settlement will be final and irrevocable and
includes settlement of income tax disputes as well.
In addition, the settlement agreement provides that Arrow will
retain the right to past insurance recoveries and any future
amounts recovered from pending claims or claims yet to be
Meanwhile, Arrow expects that the settlement amount together
with any insurance recoveries will be sufficient to cover
potential future costs relating to environmental clean-up
activities and any other asserted or unasserted claims in
connection with the Wyle acquisition. However, management does
expect that unexpected costs might crop up beyond the accounted
Most recently, Arrow announced that it will acquire all the
assets and operations of the wireless and infrastructure business
unit of Waching Company Ltd.
China based distributor Waching is well positioned in the fast
growing wireless and infrastructure market.
The company has operations in Shenzhen, Shanghai, and Beijing
and expects to report sales of $33 million in 2012. Arrow
expects the acquisition to propel the company's expansion into
fast growing Asian markets.
In recent times, Arrow is subjected to significant competitive
pressures from the likes of
Richardson Electronics Ltd.
As of now, we maintain a long-term Neutral recommendation on
the stock. Our recommendation is supported by a Zacks #3 Rank on
the stock, which translates into a short-term rating of
ARROW ELECTRONI (ARW): Free Stock Analysis
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