Premier’s backing for £691m takeover by Avnet
MINI-COMPUTER MAKER Premier Farnell said it intends to unanimously recommend Avnet’s £691m cash offer and drop its recommendation for a previous takeover bid by Daetwyler.
US electric component distributor Avnet’s offer trumps the earlier bid from Switzerland’s Daetwyler Holding.
Avnet said it was too early to say whether the deal will involve job losses at the Leeds-based electronics distributor, which employs 1,075 people in the city.
However, it was able to give more reassurance on job security than Daetwyler.
In its offer statement, Avnet said: “Avnet attaches great importance to the track record, skills and experience of the existing management and employees of Premier Farnell.
“The transaction will augment the capabilities of both Avnet and Premier Farnell and will offer attractive career opportunities for employees to progress in a business of greater size and scope that incorporates the skills and talents present in both groups.”
The American firm said that Premier’s management team is a key part of the attractiveness of the deal and it intends to enter into discussions with senior management about staying on at the combined group.
Avnet’s 185p per share offer represents a premium of 12.5 per cent to Premier’s closing price on Wednesday, and is 12 per cent higher than the Daetwyler offer.
Shares in Premier closed up 18.5 per cent at 195p, their highest level since June 2015.
The rise in the stock price above the Avnet offer indicates that some investors are expecting a higher bid, which could still come as a counter from Daetwyler.
Daetwyler had agreed to pay about £615m in cash for Premier. A spokeswoman for Daetwyler declined to comment on a possible higher offer.
Including debt, Avnet’s offer is worth £868m, while Daetwyler’s was for about £792m.
Avnet, which distributes computer products and systems, said the deal represents a strong strategic fit as both companies share similar strategic values and have complementary product range, distribution channels and geographic footprint.
Premier’s Raspberry Pi devices are mini, low-cost computers created to help millions of children get online and learn to code.
Before Daetwyler made its offer on June 14, Premier’s shares had fallen about 30 per cent since September, when the company cut its dividend and sold a noncore unit amid falling profit and slower sales growth in its key UK and North America markets.
Analyst Henry Carver at Peel Hunt said: “A rival bid from Avnet at 185p has caused the board to withdraw its recommendation to accept Datwyler’s offer of 165p and to unanimously recommend Avnet’s.
“This makes strategic sense for Avnet, giving it access to customers at the earliest stages of the design and manufacturing process and highlights perhaps the attractiveness of UK assets when sterling is depreciated.”
Premier’s chairman Val Gooding said “The board of Premier Farnell is pleased to recommend Avnet’s cash offer for the group which is at a 12.1 per cent premium to the Datwyler proposal and provides our shareholders with significant value in cash for their shares.
“The combination of Premier Farnell and Avnet would create a leading high-service global electronic components distributor and represents a strong strategic fit.
“Both companies are highly complementary in terms of product range, distribution channels and geographic footprint,” she added.
Premier has been struggling with weak sales in its key UK and North American markets.
Last September the company announced a cut in its dividend and the sale of a non-core unit as profits fell due to slower sales growth.