), a world-leading supplier of electronic components and computer
products, recently initiated a cash tender offer through one of its
wholly-owned operating units to acquire all outstanding shares of
Internix, Inc. The tender offer, which is cleared by the Board of
Internix is slated to expire in August 2012.
Internix is a Japan-based company which designs and distributes
electronic components to various original equipment manufacturers.
The company generated over $260 million in revenues for 12 months
ended March 2012.
Whilst we await further details on the transaction, this
acquisition is expected to be immediately accretive to Avnet's
earnings and bolster the company to achieve its target of 12.5% as
return on capital (ROC) in two years time. Avnet shall be able to
establish a stronger position in the Japanese economy, thereby
expanding its market share substantially in the EMEA region through
this venture. Besides, the acquisition of Internix will
also help Avnet in augmenting its product base.
It is to be noted that the EMEA region has been a major point of
concern for the company of late. Sales across this area during the
first nine months of fiscal 2012 dropped around 8.1% to reach $5.69
billion compared to the same period last year.
This deteriorating demand in the European economy was the sole
reason for the 4.3% annual downfall reported in the company's
Electronics Marketing (EM) segment in its third fiscal quarter.
However, we can still be optimistic that the company's proactive
advances will augment its financial performance in the upcoming
The company pertains to an industry, where ominous competition
is prevalent. Hence, Avnet should stay cautious of big players,
Wesco Intl Inc.
Richardson Electronics Ltd.
Anixter International Inc.
) in the industry.
The current Zacks Consensus Estimates for the fourth quarter of
fiscal 2012 and for fiscal 2012 are $1.09 and $4.17, respectively.
The company currently retains a Zacks #4 Rank, which translates
into a short-term "Sell" rating. However, we are maintaining a
long-term "Neutral" recommendation on the stock.
AVNET (AVT): Free Stock Analysis Report
ANIXTER INTL (AXE): Free Stock Analysis Report
RICHARDSON ELEC (RELL): Free Stock Analysis
WESCO INTL INC (WCC): Free Stock Analysis
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