Distribution Doings: Avnet Fires On All Cylinders
Avnet, Phoenix, sold its $100 million HP end-user sales organization to solution provider Logicalis in a transaction set to close Jan. 9. Bloomfield Hills, Mich.-based Logicalis, in turn, agreed to switch all of its HP and IBM product purchases from Arrow to Avnet in a five-year deal valued by Avnet at $1 billion. In addition, Avnet spun off its Avnet Enterprise Solutions networking division and formed a new $300 million VAR organization in partnership with solution provider Calence (see related story, page 39).
Steve Tepedino, president of Avnet Technology Solutions, Americas, said bundling the distribution pact with the sale of its tier-one HP business was key to winning Logicalis as a partner. “We always looked at Logicalis as a quality partner with a great reputation in the marketplace, and it&'s been my desire for many years to come up with a way to create a partnership with Mike [Cox, Logicalis&' CEO] and his company, and we found a way to put it together,” Tepedino said.
Ed Coleman, president of Arrow North American Computer Products, Englewood, Colo., acknowledged that Avnet&'s packaging the HP business with a distribution deal was the key factor in losing Logicalis&' distribution business. “Logicalis was a significant and large partner of ours, but our strategy doesn&'t change,” he said. “We will continue to focus on winning business by supporting our customers&' long-term growth and profitability.”
Cox said Logicalis asked both Arrow and Avnet to bid for its HP and IBM business in August when the three-year exclusive distribution deal with Arrow expired. “Both distributors came forth with competitive offers,” Cox said. But Avnet&'s bundled deal was the most compelling.
“Us being able to then buy from them with all of our buying power plus the acquired business—it just came together and made sense for us to do,” Cox said. He added that the acquisition of Avnet&'s HP business provides Logicalis with a strong presence on the West Coast, Phoenix and St. Louis and gives the company annual HP revenue of about $220 million.