Avnet to acquire Memec

Under the terms of the agreement, Memec investors will receive a total of approximately 24.011 million shares of Avnet common stock plus approximately $64 million of cash. The transaction is expected to generate annual synergies of approximately $130 million from cost savings (including $10 million from reduced interest expense) and is expected to be immediately accretive to earnings (excluding integration charges). The closing of the transaction, which is subject to customary regulatory approvals, is anticipated in 60 to 90 days. Memec, a leading global distributor specializing in semiconductors, generated revenue of approximately $2.3 billion in calendar year 2004. In the same period Memec generated operating income of $63 million, adjusted to exclude certain non-recurring expenses. The privately-held company, which employs 2,400 people, provides customers with engineering expertise and design services covering a portfolio of semiconductor devices from industry leading suppliers. Memec will be integrated into Avnet, Inc. and its Electronics Marketing Group. After the acquisition, Avnet's Electronics Marketing Group will have operations in 69 countries and anticipated annual sales of over $8.5 billion. Roy Vallee, Avnet's Chairman and Chief Executive Officer, commented, 'We are excited about the opportunity to significantly expand our presence in each of our existing three regions as well as gain entry into the important Japan market. Memec is a well established semiconductor distributor with valuable franchises, strong technical capabilities and many talented people. In addition to delivering more value to both companies' customers and suppliers, the combination creates significant value for Avnet shareholders. We believe that EPS accretion will begin immediately and we expect to realize double digit returns on this investment once the integration is complete.' Memec, with operations in 33 countries and 130 cities, is the largest semiconductor distributor focused primarily on design chain services. In calendar year 2004, Memec grew total revenue approximately 27%, with the Americas accounting for 44% of Memec's 2004 revenue followed by the Asia region, including Japan, at 31% and Europe, Middle East and Africa at 25%. David Ashworth, Memec's President and Chief Executive Officer, commented, 'Given the increased demands of global technology markets, we have been exploring a number of strategic alternatives and combining with Avnet provides the best future for Memec. Avnet's global infrastructure and access to capital, coupled with our technical expertise, will deliver industry leading value to our trading partners while allowing our investors to also participate in the value being created.' 'The acquisition of Memec strongly enhances our global design chain capabilities while reinforcing our critical role in supply chain services,' stated Harley Feldberg, President of Avnet Electronics Marketing. 'With an expanded franchised supplier line-card, coupled with a portfolio of world-class design chain and supply-chain services, we are confident that we will further strengthen our relationships with customers and suppliers.' Banc of America Securities LLC acted as financial advisor and Gibson, Dunn & Crutcher LLP acted as legal counsel to Avnet in connection with this transaction. Credit Suisse First Boston LLC acted as financial advisor and Simpson Thacher & Bartlett LLP acted as legal counsel to Memec in connection with this transaction.