Avnet looking to acquire on back of Cellnet deal

Distributor will continue to look at M&A activity to expand its presence across the Asia-Pacific region

Avnet will continue to look for acquisitions after picking up the IBM business of embattled rival distributor, Cellnet (ASX: CLT).

Avnet director of marketing and business innovation, Michael Costigan, told ARN the distributor was in the process of evaluating Cellnet’s inventory and staff, which are located across Queensland, NSW and Victoria. It is understood, nine out of 15 Cellnet staff – excluding warehouse staff – have been offered positions at Avnet.

“Obviously it will expand and consolidate our presence in Queensland, which is a good thing for us,” he said. “It will give further emphasis to Avnet / IBM business here in Australia.

“We are looking at what inventory they currently have on their books and are in the process of evaluating that inventory and how well it is and whether we have a need for it with our existing supplies and existing partners.”

Financial details of the deal have not been disclosed, however, it is expected to release $2 million in working capital for Cellnet over the next two months and have little impact on earnings, the embattled distributor said in a statement to the ASX.

“All I can say it was not a transaction as such – we did not buy a business or anything like that,” Costigan said. “We’ve basically stepped in and are going to take on some staff while driving that volume server business with our existing value business.”

Avnet will also continue to look at acquisitions across the Asia-Pacific region to drive growth and has been looking at a number of organisations in Australia and New Zealand, while also being approached by many potential acquisition candidates.

“If you look at what is happening in the market place there is a lot of consolidation occurring. If you look at the Sun and Oracle acquisition and things like that there is a lot more of it happening in the market place today,” Costigan said. “From a distribution perspective we are also starting to see more of it happen globally and basically in the region as well. Companies such as Ingram Micro and Avnet are expanding their position in the region.

“We see the Asia-Pacific region as a real growth market – hence why we acquired a company in India last year and started up operations in China in December. Avnet is very much looking at other organisations in the region to build our presence here.”