Tech Data To Buy Technology Solutions Business From Avnet For $2.6 Bln

(RTTNews) - Tech Data Corp. (TECD) said that it agreed to acquire the Technology Solutions business from Avnet Inc. (AVT) for $2.4 billion in cash and 2.785 million shares of Tech Data common stock, in a transaction valued at about $2.6 billion, based on a 15-day weighted average closing stock price. Tech Data also expects to realize about $200 million in present value of tax benefits.

In the pre-market trade, AVT is currently trading at $44.00 up $4.79 or 12.22 percent.

Tech Data expects that the transaction will be significantly accretive to its non-GAAP earnings per share in the first year after closing.

Tech Data expects to achieve annual cost savings of about $100 million within two years after closing, primarily from efficiencies related to technology platforms, as well as duplicative functions and corporate expenses.

As per the terms of the agreement, which was approved by the boards of directors of both companies, Avnet will receive at closing $2.4 billion in cash and about 2.785 million shares of Tech Data common stock, representing an approximate 7 percent ownership position in Tech Data.

Tech Data noted that it intends to finance the cash portion of the consideration through a combination of cash on hand, drawings under its existing revolver, and proceeds from a new term loan facility and senior notes, which are backstopped by fully-committed debt financing from BofA Merrill Lynch.

Upon completion of the transaction, Avnet expects to realize a gain of $3.75 to $4.75 per share.

The transaction is expected to close in the first half of calendar 2017, subject to customary closing conditions and regulatory approvals.