Tech Data Acquires Avnet TS for $2.6 Billion

Tech Data is prepping its company and channel partners to meet demand for third-platform technologies, including cloud computing, big data and analytics, social media and mobile computing. A big part of this strategy was bolstered by Tech Data’s recent $2.6 billion acquisition of Avnet’s Technology Solutions (TS) business.

The combination of the two companies brings new and complementary skills and services, expanded vendor relationships, and an extended customer base in more markets. It also offers partners a broader array of products, services and capabilities for their customers.

A key advantage of the combined companies is a larger geographic footprint, including a presence in Asia-Pacific, a new market region for Tech Data. It also allows Tech Data to re-enter Latin America with a focus on the data center.

By the numbers: The new company has operations in 40 countries with 14,000 employees and 115,000 customers in more than 100 countries. Market research firm IDC believes it will expand Tech Data’s channel network to 125 partners. Approximately 45 percent of Tech Data’s business will be split between the Americas and Europe, with the remainder in Asia Pacific. Before the deal, approximately 60 percent of Tech Data’s business came from Europe and 40 percent from the Americas.

Bob Dutkowsky, chief executive officer of Tech Data, spoke with Channel Insider about what the acquisition brings to Tech Data and its channel and vendor partners. He believes the company now offers the best of two worlds: a broadline distributor with a wide breadth of products that also offers deep value-added services.

“For a while, everyone thought everything was going to move to the cloud,” said Dutkowsky. “The reality is that hybrid IT is the future, and hybrid IT starts with your smartphone in your pocket and goes all the way to the data center and into the cloud.

“Technology Solutions gives us deeper skills and accelerates our position with new and emerging vendors in these areas.”

In order to be effective over the next decade, distributors need to have the ability to provide end-to-end solutions and a diverse set of solutions—from the living room to the data center—that can support vendors and partners, as workloads are optimized across platforms, according to Dutkowsky. “If you don’t have that kind of reach and capability, you’re going to have a very hard time supporting the next world of IT,” he predicted.

Tech Data is creating a distributor that the next generation of vendors will want to do business with once they look at its end-to-end capabilities and the depth of skills across the whole spectrum of IT, including footprints in Latin American and Asia Pacific, Dutkowsky said. “The combination of the two companies will give us a lot more breadth and capability than we’ve ever seen before,” he added.

IT Spending Will Take Place in Next-Gen Tech

Over the next few years, Dutkowsky believes that the majority of IT spending will take place in next-generation technologies and services that support the environment of converged and hyper-converged infrastructure, cloud computing, mobility, security, big data and analytics. However, Tech Data and Avnet on their own couldn’t make the investments quickly enough to get critical mass in any of those areas, he added.

Each of the individual companies has its strengths. While Avnet is more advanced in big data and analytics, as well as converged and hyper-converged technologies, Tech Data excels in mobility. Both companies have robust cloud businesses and security offerings.

Another common factor the companies share is their objective to help resellers transition to new third-platform technologies and solutions.

“Resellers are getting there at different rates and paces,” said Dutkowsky. “Some can see the business opportunity and are investing, while others are taking a wait-and-see attitude. The transitions don’t happen overnight.”

Channel partners can outsource their supply chain to Tech Data, enabling them to spend their energy on building deep skills for hybrid cloud, hybrid IT and the deployment of security

“Our channel partners have shown overwhelming support of the combination. They see multiple benefits from a larger geographic footprint and expanded capabilities,” said Dutkowsky. “Our customers recognize our broader end-to-end portfolio of IT solutions, and a deeper set of skills, services and education that we can now offer to help them grow their businesses and capture opportunities in new and emerging technologies.”

“Our vendor partners see how our enhanced capabilities will help them reach new and diversified customers and help accelerate their growth in third-platform technologies,” he added.

Dutkowsky sees big opportunities in the internet of things (IoT), which plays into Tech Data’s commitment to the data center. “The real value is in the data center,” he said. “It’s the collection, management, analysis and storage of the data created in the IoT deployment.”

As Tech Data works through the integration of the two companies, it’s making efforts not to disrupt its channel or vendor partners’ businesses. It’s also striving to select the best elements—such as coverage models, processes and systems—from both companies to build a distributor that has a distinct advantage in the marketplace.