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Avnet Takes Kent for $600 Million

Avnet, a Phoenix-based electronics distributor, expanded its offerings Thursday with the acquisition of Houston-based competitor, Kent Electronics.

The stock-for-stock transaction, which is valued at $600 million, is expected to be completed in 90 days.

Avnet is a supplier of semiconductors, interconnect, passive and electromechanical components and computer products, while Kent focuses on specialty distribution and network integration.

The union will create the largest specialty components distributor of its kind in North America, according to Roy Vallee, Avnet chairman and CEO.

"By combining Kent's electronic components operation...with Avnet's electronics marketing group's domestic interconnect passive and electromechanical (IP&E) business, we will create...a $1.6 billion division that will be highly-focused and able to provide IP&E products and value-added services to a broad customer base," he said.

"The union allows Avnet to take advantage of Kent's strengths in the IP&E market," said David Cobb, assistant treasurer at Kent. "This is an area where Avnet has been less focused."

The acquisition is part of an overall plan to accelerate earnings growth through increased product focus and specialization on a global basis.

The deal is expected to be have a slightly dilutive effect on earnings per share for the first one or two quarters of combined operations, but is expected to rebound after that. As part of the transaction, Kent shareholders will receive 0.87 Avnet shares for each Kent share on a tax-free basis.

At press time, Kent was trading at 16.29, up by 2.45 percent, while Avnet was selling at 19.650, down by 3.77 percent.

Larry Olson, Kent's current president and CEO, will head the new Phoenix-based division. Kent's network integration equipment and service operation will remain in Houston.

Cobb noted that as a result of the acquisition, some layoffs will take place.