Avnet and itX spill details on potential $77.5m acquisition

Avnet and itX spill details on potential $77.5m acquisition

Avnet country manager, Gavin Lawless and itX managing director, Laurie Sellers, shed more detail on the impending $77.5 million acquisition

Avnet Technology Solutions impending acquisition of ASX-listed itX (ASX:ITX) for $77.5 million is set to be one of the biggest Australian distributor acquisitions in recent times.

The purchase is still subject to shareholder and court approval, which could take five months to complete.

If the acquisitions process goes to plan, Avnet country manager, Gavin Lawless, hopes to have it finalised in January next year.

“While we’ve had approval from the Board, even though they’ve recommended the offer, it still has to go to a shareholder vote,” Lawless said. “Until that happens and assuming that someone doesn’t make a superior offer to us, it will go ahead.”

“We’re hoping it will lead to an acquisition but these things aren’t certain until you get approval and it’s closed.”

Locally, the two distributors don’t have much of a product cross over. Avnet distributes IBM hardware and itX provides IBM software.

Globally, Avnet counts Oracle and Sun Microsystems in its vendor portfolio but locally it lacks those two vendor relationships, which make up a part of the itX line-up.

Lawless said the two distribution businesses were highly complementary and share similarities such as company size, customer base and go-to-market strategy.

“We’ve been growing our presence significantly over the last few years, and this will increase our significance in a fairly substantial way,” Lawless said.

As part of the 100 per cent shares buyout process, itX would have to de-list from the ASX and the company would fall under Avnet globally, which is already listed on the New York Stock Exchange (NYSE).

Lawless could not divulge further details on its plans at this stage.

“Obviously, we have some sort of idea, but we would be crazy to make any plans and spending a whole lot of time going through the process before we know what’s going to happen,” he said. “itX will have a significant involvement in the planning process and we’d make joint decisions.”

itX managing director, Laurie Sellers, said joining up with Avnet would effectively double its presence. The enormity of Avnet’s business globally would ultimately provide employees with broader career prospects.

“We’ll look at some of the obvious things over time on what we would do to integrate our backend systems and so on, but clearly they don’t have enough room in their building for us and we don’t enough room in our building for them, so we’re going to have to operate separately as far as premises are concerned,” Sellers said. “But we’ll be looking at how we can integrate our network, systems and so on, but we’ll need to develop a proper implementation plan and we’ll have to go through all the formalities to get the deal completed.”

“The acquisition will create something quite exciting in the market in terms of a very dynamic distributor.”

The itX Board of Directors has recommended shareholders to vote in favour of the scheme in the absence of a superior proposal and subject to receipt of a favourable independent expert's report.

Under the Scheme Implementation Agreement with Avnet Technology Solutions (Australia), itX shareholders will receive $1.55 in cash for each share they hold on the scheme record date.

The aforementioned special dividend payment to itX shareholders will be up to $0.20 a share (in addition to its normal full year dividend) subject to certain conditions.

Earlier this month, speculation was rife about a potential buyout of itX.

At the time of publication itX shares were trading at $1.42, up more than 14 per cent since August 6.

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