Avnet buys ChannelWorx

Avnet buys ChannelWorx

Acquisition will give Avnet a better Melbourne presence as well as grow its networking vendor base

Avnet has acquired ChannelWorx for an undisclosed sum. The Melbourne-based distributor will become the core of Avnet's networking security business with a vendor line-up that includes Juniper Networks, Avaya, IronPort, Extreme Networks and Google.

Avnet general manager, Gavin Lawless, said the deal was part of a broader strategy to grow the business around four practice areas - HP, IBM, networking security, and storage.

"ChannelWorx is a very complementary business to ours with no overlapping vendors," he said. "It will become the cornerstone of our networking security practice."

Lawless said all 30 ChannelWorx staff would be retained. Managing director, Paul Oxley, joins the Avnet team as business unit executive for networking security. Co-founder, Scott Lidgett, will stay on as a consultant.

ChannelWorx enjoyed a record year in the 12 months to June 30, according to Lidgett, and he has been approached "by all the usual suspects" in recent years to discuss selling up.

"We keep a low profile but have just enjoyed our most profitable year ever," he said. "My view has always been that we are a people business and we only lost one member of staff in the last year so Avnet is buying a business in great shape.

"We wanted to sell to somebody that would allow ChannelWorx to keep its culture. We have some great practice managers that had hit a glass ceiling working for a small business and now have a great opportunity to blossom."

While Lidgett has "millions of reasons" to be pleased about the sale, his immediate focus is on the year ahead with Avnet.

"I'm looking forward to it because I've never been involved in an integration project like this before or worked for a multinational," he said.

Lawless said Avnet would continue to look for suitable acquisitions but it would not be pursuing embattled Queensland distributor, Cellnet.

"The Cellnet business is not aligned to ours," he said. "We have a bigger and bigger industry standard server business, and that's very exciting for us, but we are getting such extensive organic growth that I don't think [buying Cellnet] would make a huge amount of sense. Quite frankly, we are not interested in commodity products."

In the financial year to June 30, ChannelWorx recorded revenues of about $30 million. It has about 300 resellers and systems integrators on its books.

Initial reseller reaction to the acquisition was positive, although many Avnet resellers contacted by ARN were unfamiliar with ChannelWorx.

Sales director at IBM partner and long-time Avnet customer Service Elements, Mark Johnston, said any deal that put more of the right products on Avnet's line card was positive.

"Avnet's challenge in Australia has been that they have relatively limited lines to on-sell," he said.

"They've been working hard for a while to get into areas like NetApp and bring on software products. The more we can fill out on our order with them, the better." e-Volve CEO, David Simpson, also said complementary, value-based products would lift Avnet's status.

Ethan Group division manager, Antony Flutey, has dealt with both distributors. He claimed the two shared a flexible, nimble culture and were a great match.

"There are good technology sets in both organizations and a value-added services culture, so it makes a lot of sense," he said. "Both are good, strong value added distributors in discrete markets.

"This gives Avnet the opportunity to break into new areas, and on the surface, I see it as a good thing. It also shows that Avnet is clearly making a significant investment into the local market. As long as they do [the integration] right and can uphold the culture, it will work well."

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