EC green lights Avnet acquisition of Horizon

The European Commission has given its blessing to Avnet Inc’s acquisition of Horizon Technology Group,  an Ireland-based IT products distributor.

All in all, Horizon had total sales of $455 million (288 million Euro) and EBITDA of $16.9 million (10.7 million Euro) before unusual items in 2007. Phoenix-based Avnet made a cash offer of $1.87 (1.18 Euros) per share or approximately $156.1 million (98.5 million Euros) in April. 

Since then, the EC has been scrutinizing the buy, saying it raised competitive concerns. After closer review, the EC has green lighted the move, one that will significantly increase Avnet’s presence in the UK and “Emerald Isle.”

“The Commission concluded that the concentration would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it,” the EC said in a statement late last week.

“The Commission examined the effects of the proposed transaction on the market for the wholesale distribution of IT products in the EEA and focused on the markets for the distribution of servers (and the sub-categories of high-range and mid-range servers) in the UK,” the statement continued. “Even though the merger would create the strongest player in these markets, the Commission’s investigation identified a number of elements which led it to the conclusion that anti-competitive effects are unlikely to occur.”

The EC based that conclusion on a number of other wholesale distributors that it believes will exercise competitive constraints on the merged Avnet-Horizon company, as well as manufacturers of IT products and software producers that sell their products directly to resellers and retailers, bypassing distributors.

The post-Horizon-merger Avnet may not be anticompetitive, but it’s sure to be one of the strongest electronics supply chain forces in UK IT. Horizon, which will be integrated into Avnet’s European Technology Solutions business, has grown to become one of the leading systems integration and distribution companies in the UK and Ireland. Its distribution business targets enterprise server, storage, networking, security and communications products from the biggest vendors including Sun Microsystems, IBM, Nortel, Oracle, and Tandberg. Meanwhile, Horizon’s client solutions business unit partners with major software vendors including BMC, Microstrategy, and SAP for a full range of development and implementation services. Crossover sales opportunities for Avnet will abound from this acquisition.

Share your thoughts on the Horizon deal below. Also, in related news this week, Avnet announced its acqusition of Source Electronics, a provider of outsourced custom programming services for ICs, as it looks to extend itself into additional adjacent service markets.