Avnet Expands in China

• By Zacks Equity Research
• On 3:07 pm EDT, Monday October 19, 2009

Avnet, Inc. (NYSE: AVT - News) recently announced that it has acquired a controlling interest in Vanda Group from Hutchinson Whampoa Limited in a strategic move to expand its presence and customer base across China. Vanda Group will operate as an Avnet company while maintaining its current operations, management team and the Vanda brand.

Vanda Group is a leading IT solutions and services provider covering major cities in China, Hong Kong and Macau, and has been around 27 years. Vanda Group provides systems integration services and solutions incorporating hardware and software from major suppliers including IBM (NYSE: IBM - News), Lenovo, Cisco (NasdaqGS: CSCO - News), Sun (NasdaqGS: JAVA - News), Nokia (NYSE: NOK - News) and Oracle (NasdaqGS: ORCL - News). The company serves clients from diverse industries including major banks, financial institutions, telecommunications companies, utilities and government departments. Vanda Group generated revenues of approximately $50 million in 2008 and employs more than 600 people.

The transaction will also provide the Technology Group at Avnet with a strong foothold in the banking and financial sector, where Vanda’s flagship product, VisionBanking Suite, is a well-known solution.

Avnet earlier entered into a distribution agreement with India-based MosChip Semiconductor Technology Ltd with a view to expand arms in the emerging markets of Asia. MosChip provides high performance multimedia and connectivity solutions for consumer, industrial and computing applications. Avnet is one of the world’s largest distributors of electronic components and computer products.

With the economy showing signs of improvement, both Avnet and its rival Arrow Electronics (NYSE: ARW - News) are on the lookout for strategic fits to their business models. Management had earlier stated that growth in Asia continues to offset sales decline in other regions.

Earlier, Avnet reported weak fourth-quarter results, as its top line remained challenged by adverse business conditions amid the global economic slowdown. The company’s organic growth continues to be lackluster and it continues to expand only through acquisitions.

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