Electronics and IT distributor
) recently announced that it will acquire Hong Kong-based
value-added distributor, RTI Holdings Ltd. along with its three
associate companies (RTI Technology China Ltd, Eastele Technology
China Ltd, and DSP Solutions Ltd). Financial details of the deal
were kept confidential.
RTI Holdings, a 24-year old company, specializes in delivering
wireless, optical, telecom, data communications, and industrial
components across Hong Kong and the People's Republic of China.
RTI Holdings serves 700 customers across telecom and datacom,
industrial and digital home applications end markets. The company
also provides specialized engineering services, technical support
and sales promotion activities.
Post closure of the acquisition, Avnet will integrate the new
division into its Electronics Marketing segment as RTI's
offerings will compliment the segment's flagships. With RTI
Holdings, Avnet will be able to boost its product portfolio and
extend its geographical reach in Asia (mainly in China).
The acquisition is expected to close by mid-April. Avnet expects
the acquisition to be accretive to its earnings shortly.
In the second quarter of 2013, revenues from Avnet's Electronics
Marketing segment grew 2.2% from the year-ago quarter to $3.67
billion led by double-digit growth in the volume fulfillment
business in Asia, which offset weak performances in America and
Europe. For third quarter, Avnet expects segment revenues within
the range of $3.625-$3.925 billion, implying a decent sequential
We believe that with RTI Holdings, Avnet will be able to achieve
or even surpass its expectations.
Distribution companies usually operate on razor-thin margins.
Therefore, there are only a couple of ways to grow in this
market. One of the most fruitful ways is through accretive
In January, Avnet acquired California-based IT professional
services company, TSSLink Inc. for an undisclosed amount and
added it to its Technology Solutions segment.
During 2012, the company acquired as many as 13 new units. These
acquisitions are expected to augment the company's product
portfolio and enhance its performance quite comprehensively going
Avnet sees significant competition for both its domestic and
foreign operations. It has an archrival in
Arrow Electronics Inc.
), although other big players such as
Anixter International Inc.
Richardson Electronics Ltd.
) are also not to be discounted.
Currently, Avnet has a Zacks Rank #1 (Strong Buy).
ARROW ELECTRONI (ARW): Free Stock Analysis
AVNET (AVT): Free Stock Analysis Report
ANIXTER INTL (AXE): Free Stock Analysis
RICHARDSON ELEC (RELL): Free Stock Analysis
To read this article on Zacks.com click here.