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Avnet (NYSE:AVT) Projects Up to 9 Percent Annual Latin America Revenue


Tuesday, March 30th, 2010

Avnet Technology Solutions (NYSE:AVT) says growth in its Latin American markets should continue at a 7 to 9 percent rate annually, strengthened by the acquisition of Bell Microproducts (Nasdaq:BELM), a wholesaler of IT products.

Sales for Bell in Latin America were approximately $500 million in 2009, and according to Avnet CFO Ray Sadowski, it seems Bell's growth, which is primarily what the 7 to 9 percent annual growth projection is based upon, is poised to move ahead at that pace for some time.

Avnet has almost zero presence in Latin America, other than a small and largely irrelevant commercial office in Brazil. Now they have a fairly significant presence with the acquisition of Bell, and along with Brazil, will target generating revenue growth primarily in Mexico in Chile.

Bell Microproducts distributes a large variety of technology products and services, with products including software, storage systems, servers and peripherals, among others. They also provide professional and maintenance services for their clients.
 
One odd thing to me when reading about the acquisitions and projections regarding Bell by Avnet executives was they would include words like they "heard" something about this or that, or that they need to "understand" the business better before making a lot of decisions.

But I would have thought a company acquiring a company like Bell would have done complete due diligence before throwing down the money to buy it. While it may have been the language used, it seemed as if Avnet bought blindly and now are trying to figure out what they got.

If they don't understand the business they sure shouldn't have bought it in my estimation.

Avnet said it will pay $7 a share for Bell, which would cost the company $594 million. The deal is scheduled to be close in two to four months.



Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: avnet , bell microproducts , it business