Avnet Sells HP Business to UK FirmBy John Hazard | Posted 2005-11-28 Email Print
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Updated: Sale of its end-user arm solidifies Avnet's commitment to the two-tiered distribution model; Logicalis is set to make further acquisitions on way to $650 million U.S. footprint.
IT distributor Avnet this week signed over its U.S. Hewlett-Packard Co. end-user business to HP's largest reseller in a move that further solidifies Avnet's commitment to the two-tiered distribution model.
The deal gives Logicalis, a U.K. firm, ownership of Avnet's $100 million HP reselling business for an undisclosed sum and secures Logicalis' HP and IBM enterprise product business for Avnet for the next five years, valued at $2 billion, executives at both companies said.
The sale is expected to be finalized in January.
The deal severs one of Avnet's last end-user relationship's, indicating the distributors ongoing commitment to partner with resellers and service offerings to product sales, said Steve Tepedino, president of Avnet Technology SolutionsAmericas.
"We get a known higher value-add that gives us the opportunity to bring more to the table through our resellers," Tepedino said. "The more diversity [we add] to our portfolio, the more services, the better we serve the end user."
Logicalis is already a HP premium partner and largest reseller.
For Logicalis, the deal adds $100 million in U.S. enterprise revenue and rounds out its enterprise portfolio.
During the past two years, Logicalis purchased Eisco Technology and Solution Technology Inc., both U.S.-based IBM solution providers, for the purpose of increasing its market share of the IBM solution business, said Mike Cox, president and CEO of Logicalis' North American operations, in a prepared statement.
Logicalis also has a sizeable Cisco Systems and EMC practice, he added.
The Avnet acquisition makes Logicalis not only a "leading Unix platform and storage high-performance integrator, but also a leading Wintel/Linux platform solution provider," Cox said.
"We've been looking to increase our U.S. footprint for a while," he said. "You can only grow organically for so long and you have to think about picking up new business."
The acquisition adds HP industry-standard server, Alpha, as well as storage expertise to the Logicalis portfolio. Cox said his decision was hastened by HP's channel enhancements this year, including the decision to cease competing against channel partners for direct sales.
The Avnet infusion is expected to extend the company's footprint in the Southwest and Central United States and push U.S. revenue beyond $450 million annually.
Cox said Avnet will likely make an additional acquisition(s) to reach $600 million annually in U.S. business.
Editor's Note: This story was updated to include quotes and information from company executives.