Bell Microproducts Announces Agreement to be Acquired by Avnet
March 29 2010 - 7:30AM
Bell Microproducts Inc. (Nasdaq:BELM) ("Bell") announced today that
it has entered into a definitive agreement to be acquired by Avnet,
Inc. ("Avnet") in an all cash merger for $7.00 per share. The total
transaction value of approximately $594 million is based upon an
equity value of approximately $252 million and a Bell debt
position, at face value and net of cash, of $342 million at
December 31, 2009. The acquisition has been approved by the
Boards of Directors of both companies and is subject to the
approval of Bell's shareholders as well as customary regulatory
approvals. The transaction is expected to close in 60 to 120 days.
Don Bell, founder and Chief Executive Officer of Bell,
commented, "This transaction delivers excellent value to our
shareholders while providing an enhanced platform from which our
employees can continue Bell's heritage of helping suppliers reach
our served markets with increasingly complex solutions. Given the
rising demands of global technology markets, the investment
required to deliver leading edge technical support and competitive
supply chain networks continues to grow. Avnet's financial
resources and global infrastructure will allow the Bell
organization to deliver industry-leading value to our customers and
continue our long history of growth and market share gains."
Roy Vallee, Avnet's Chairman and Chief Executive Officer,
commented, "We are very excited about the opportunity to build
additional scale and scope in storage and computing solutions as
well as increase our presence in the fast-growing Latin America
market. Bell's position in datacenter products and embedded
systems complements Avnet's current strategies and creates
opportunities for cross selling. Bell's position as one of the
leaders in hard disk drive distribution substantially increases
Avnet's exposure to this product segment which is currently focused
on embedded computing. In support of our focus on value-added
solutions distribution in North America, we intend to explore
strategic alternatives for the single tier reseller
business. The combination of Bell's strong customer/supplier
relationships and talented employees, coupled with our value based
management culture and discipline, should allow us to achieve our
stated return on capital goals on this transaction following the
completion of the integration."
Raymond James acted as a financial advisor and Jones Day acted
as legal counsel to Bell in connection with this transaction.
Updated First Quarter 2010 Financial Outlook
Bell currently expects to generate first quarter 2010 sales of
$795 million to $815 million, an increase of 11% to 14% from the
first quarter of 2009, and on the high-end of the previous first
quarter sales guidance of $780 million to $815
million. Further, management is anticipating a first quarter
shift in product mix. Distribution sales are expected to be
relatively strong and approximately flat with Q4 sales levels,
representing an estimated increase of 17% to 20% from the first
quarter of 2009. ProSys, the Company's reseller division, is
expected to generate lower than previously anticipated sales
volumes, primarily due to seasonally lower purchases by a few large
customers. Due to this product mix shift from higher margin
single-tier sales and in part due to seasonality, the Company
anticipates generating first quarter gross margins of between 8.5%
and 9.0%, a decline from 9.4% in the fourth quarter of 2009.
Conference Call
A conference call relating to the announcement has been
scheduled for today, March 29, 2010 at 8:30 AM ET (5:30 AM PT).
Please dial (201) 689-8840 to listen to the call. In
addition, a live internet broadcast will be available via Bell's
website at www.bellmicro.com. A replay will be available
approximately 2–3 hours after the call ends. To access the
replay, please dial 1-877-660-6853 or (201) 612-7415, account
number 7815 and conference ID of 348184.
Forward Looking Statements
Some of the statements included in this press release constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You should not place
undue reliance on these statements. These forward-looking
statements include statements that reflect the current views of our
senior management with respect to our financial performance and
future events with respect to our business and our industry in
general. Statements that include the words "expect," "intend,"
"plan," "believe," "anticipate," "estimate" and similar statements
of a future or forward-looking nature identify forward-looking
statements. Statements regarding the merger, the closing of
the merger and our first quarter 2010 financial outlook are
forward-looking statements.
Forward-looking statements address matters that involve risks
and uncertainties, for example, if we do not receive the required
shareholder approval or the parties may fail to satisfy other
conditions to closing, the transaction will not be
consummated. Accordingly, there are or will be important
factors that could cause our actual results to differ materially
from those indicated in these statements. We believe that
these factors include, but are not limited to, the
following: our ability to comply with the financial covenants
in our credit agreements; our ability to achieve cost reductions
and other benefits in connection with our strategic initiatives;
the circumstances resulting in the restatement of our historical
financial statements and the material weaknesses in our internal
control over financial reporting and in our disclosure controls and
procedures; our ability to remain current in our SEC filings; loss
or adverse effect on our supplier relationships; our ability to
accurately forecast customer demand and order sufficient product
quantities; competition in the markets in which we operate; the
products we sell may not satisfy shifting customer demand; our
reliance on third parties to manufacture the products we sell; our
reliance on credit provided by our manufacturers to finance our
inventory purchases; risks related to our substantial indebtedness,
including the inability to obtain additional financing for our
operations on terms acceptable to us or at all; limitations on our
operating and strategic flexibility under the terms of our debt
agreements; our ability to attract and retain qualified personnel;
risks associated with doing business abroad, including foreign
currency risks; our inability to identify, acquire and integrate
acquired businesses; the outcome of any pending or future
litigation or regulatory proceedings, including the pending French
tax proceeding, the current shareholder lawsuit and any claims or
litigation related to the restatement of our consolidated financial
statements; the effects of a prolonged economic downturn; and our
ability to reduce professional fees for audit, legal, tax and
outside accounting advisor services.
For a more detailed discussion of how these and other risks and
uncertainties could cause our actual results to differ materially
from those indicated in our forward-looking statements, see our
reports filed with SEC (available at www.sec.gov), including our
Annual Report on Form 10-K for the year ended December 31,
2009.
About Bell
Bell Microproducts (Nasdaq:BELM) is an international,
value-added distributor of a wide range of high-tech products,
solutions and services, including storage systems, servers,
software, computer components, and peripherals, as well as
maintenance and professional services. An industry-recognized
specialist in storage products, the Company is one of the world's
largest storage-centric value-added distributors.
Bell Microproducts is uniquely qualified with deep technical and
application expertise to service a broad range of information
technology needs. From design to deployment, its products are
available at any level of integration, from components to subsystem
assemblies and fully-integrated, tested and certified system
solutions. More information can be found in the Company's SEC
filings, or by visiting the Bell Microproducts website at
http://www.bellmicro.com.
CONTACT: Bell Microproducts Inc.
Bill Meyer, Chief Financial Officer
(408) 436-4454
bmeyer@bellmicro.com
Investor Relations
Nicole Noutsios
(510) 451-2952
ir@bellmicro.com
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