U.S. electronic component distributor Avnet Inc agreed to buy Premier Farnell Plc for 691 million pounds, topping an offer from Daetwyler Holding AG for the British maker of the Raspberry Pi mini-computer.
Premier Farnell shares rose as much as 17.8 percent to 193.75 pence on Thursday, above Avnet’s cash offer of 185 pence per share, suggesting that investors expect a bidding war. Since Britain voted to leave the European Union on June 23, overseas suitors have flocked to the country in search of deals made cheaper by the sharp decline in the pound.
Japan’s SoftBank Group Corp (9984.T) agreed this month to buy UK chip designer ARM Holdings (ARM.L) for $32 billion (£24.3 billion). If the deal to buy Premier Farnell, whose low-cost computers help millions get online and learn coding, goes through, it will be Phoenix-based Avnet’s largest ever acquisition.
“Bringing these two companies together allows us to capture market share earlier in the design process,” said Gerry Fay, president of Avnet’s electronics marketing worldwide.
In June, Switzerland’s Daetwyler offered to pay 615 million pounds for Premier Farnell. Premier Farnell said its board planned to recommend Avnet’s offer and drop its support for Daetwyler’s bid. A Daetwyler spokeswoman said that the company had noted the rival offer and was “discussing further proceedings”.
Peel Hunt analysts said the deal was made particularly attractive by the weaker pound. Since Brexit, the pound GBP= had lost 11 percent against the dollar through Wednesday’s close. Avnet said it expected the deal to close before the end of the year and add to its earnings immediately. Stifel analysts said Avnet’s offer for Premier Farnell would hurt competition in continental Europe, a concern that was also raised when Daetwyler made an offer.
Premier Farnell, based in the northern English city of Leeds, has not been without its troubles. Before Daetwyler made an offer on June 14, the British company’s shares had lost nearly a third of its value since September, when it cut dividend and sold a non-core unit amid slowing sales growth in its key UK and North America markets.
Avnet shares were down 0.2 percent at $40.76 at 0140 GMT, while Daetwyler stock was down 1.5 percent at 133.70 Swiss francs. Bank of America Merrill Lynch is advising Avnet on the deal, while Lazard & Co is advising Premier Farnell.
(Editing by Gopakumar Warrier and Kirti Pandey)