Per the deal inked in mid-2013, electronics and IT
), has acquired the remaining share in MSC Investoren GmbH (or
MSC Group). MSC is a German distributor of electronic components
(embedded computing technology and display solutions).
Earlier in Jul 2013, Avnet announced the acquisition of MSC
Group through a two-part process. Avnet acquired the majority of
MSC Group's shares in Oct 2013.
Avnet will integrate MSC Group's distribution and supply chain
services with its current operations. Apart from owning an
enhanced product portfolio, Avnet will be better positioned to
meet the growing demand for electronic solutions in the European
industrial electronics market.
The addition will help Avnet to boost its margins. The
acquisition will also be accretive to Avnet's earnings per share,
helping it to achieve long-term return on capital (ROC) of 12.5%.
The earnings accretion expectation seems achievable given MSC
Group's solid revenue generation of more than $450.0 million in
Apart from this, Avnet has been entering into partnerships
with various IT and semiconductor companies to expand its
portfolio that will place it in a strong position in the
enterprise software market compared to its prime competitor
The recent agreements with
), TechNexion and
) are expected to be beneficial for the company in the long
We remain optimistic about Avnet's leading position in
electronics distribution, continuous cost cutting initiatives and
acquisition synergies. The company's prudent acquisitions have
enabled it to expand its product portfolio and add to its revenue
However, a sluggish macroeconomic environment coupled with a
tepid IT spending projection and competition from other
electronic component distributors remain headwinds, going
Currently, Avnet has a Zacks Rank #3 (Hold).
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