Avnet Acquires Magirus (AVT)

Avnet, Inc. (AVT) recently completed the previously-announced acquisition of Germany-based distributor Magirus Group (Magirus).

Magirus primarily distributes data center solutions and services. The company also provides software, system and other solutions to approximately 11 markets across Europe and the Middle East.

The solutions provided by the company include virtualization, storage management, cloud computing, security, intelligent networks, open source and information life-cycle management services.

Magirus generated revenues of $530 million in 2011, up 20% year over year. This acquisition is expected to be immediately accretive to Avnet’s bottom line and will help the company achieve its target of 12.5% in return on capital (ROC) over the next two years.

Avnet expects the acquisition to broaden its footprint in Europe, Middle East and Asia. Additionally, Magirus’ wide product portfolio will expand Avnet’s product offerings and enable it to meet the increasing customer demand for integrated and virtualized solutions.

With a team of over 400 business and technical professionals that provides support to 4,500 resellers, system integrators and IT service providers; Magirus will be integrated into Avnet Technology Solutions’ EMEA business.

Meanwhile, Avnet’s other operating unit, Avnet Electronics Marketing, recently entered into a distribution contract with Triad Semiconductor in America. With this association, the company will now be engaged in supplying Triad’s low-cost mixed signal ViaASIC solutions in Americas.

Established in 2002, Triad Semiconductor manufacturers low-cost mixed signal ASICs through its unique via-configurable array (VCA) technique. Triad’s VCAs have almost the same features as the field programmable gate arrays (FPGAs) and it also consists of analog cells, which help in integrating analog and digital circuits.

Now, with the agreement, Avnet’s clients in the medical, industrial, consumer and automotive sectors will be able to easily integrate various semiconductor solutions through Triad’s cost-effective ViaASIC services. Management stated that the contract would not only expand the company’s product portfolio but also address customer needs more efficiently. Triad’s exclusive IC technique is expected to provide cheaper and faster IC integration to the company’s clients.

The company’s continuous contract wins and strategic acquisitions are expected to boost its long-term potential. We maintain a long-term ‘Neutral’ recommendation on the stock. The company currently retains a Zacks #5 Rank, which translates into a short-term ‘Strong Sell’ rating.