Distribs at EDS Gamble on Brazil, E-Commerce : Avnet, Arrow and Bell move to salsa beat

Electronic News, May 24, 1999 by Heidi Elliott

Las Vegas-Lured by an influx of investment in Latin America by electronics manufacturers, three distributors last week made acquisitions that give them a presence in that region.

Arrow Electronics Inc. and Avnet Inc. purchased majority interests in Brazilian distributors, while Bell Microproducts Inc. bought a Miami- based computer distributor that serves the Latin American market. The companies said the acquisitions were motivated by increasing customer demand for components in Brazil due to the recovering economy there.

"The multinational (customers) both of the contract manufacturing ilk and the OEM ilk are starting to invest in Brazil and want to be served by their traditional channel partners there," said Robert E. Klatell, Arrow's executive vice president. "We're just moving with our customers."

Steve Church, president of Avnet Electronics Marketing Group, agreed.

"As many of our global customers are establishing new or expanding existing operations, they are asking Avnet to locate in Brazil to support their electronic component requirements," Church said. He added that many of these customers want local inventory, so they can have faster inventory replenishment services and more efficient just- in-time delivery.

The surge in investment comes just four months after Brazil devalued its currency amid political turmoil and economic meltdown. While Brazil still is expected to see a 4.5 to 5.5 percent decline in its Gross Domestic Product in 1999, experts believe the economy has hit its low point and has nowhere to go but up. The combination of current economic slowness and expected future growth makes the Brazilian distributors ripe for the picking.

Arrow has agreed to acquire a two-thirds interest in Panamericana Comercial Importadora, S.A., the largest components distributor in Brazil. Terms of the deal were not disclosed.

Formed 28 years ago and based in Sao Paulo, the company had sales of approximately $18 million in 1998. Panamericana's line card includes AVX, Motorola, National Semiconductor and Philips. Dalton de T. Carrijo, chief executive officer of Panamericana, will hold the balance of the outstanding shares in the company and will continue in his current position. Once the deal is complete, the company will be known as Panamericana/Arrow.

Avnet has purchased a 70 percent interest in Bridge International Comercio E Importacao Ltda., a leading Brazilian distributor with sales of approximately $7 million in its latest fiscal year. Avnet will rename the business Avnet do Brasil. The company, whose headquarters is in Sao Paulo, will operate as a member of Avnet Electronics Marketing Americas (EMA) under the direction of Jose Luis Vara, regional manager. Operations will include a dedicated sales team, administration and a warehouse.

Avnet cited technical competence as another reason for its purchase. Bridge provides technical support before and after sales. It routinely conducts technical workshops and assists with customers' designs. The company was founded in 1992 to service the telecommunications, computer, automotive, industrial and contract manufacturing markets. Its lines include Analog Devices, Bourns, Siemens, Temic and Texas Instruments.

Bell Microproducts has agreed to acquire certain assets of Future Tech International. Future Tech International, whose 1998 sales were $180 million, is a privately-owned, Miami-based distributor of computer components serving the Latin American market. The acquisition will be accomplished through confirmation of Future Tech's Chapter 11 plan of reorganization. The transaction is expected to be completed in July. Future Tech's lines include AMD, Canon, Maxtor, NEC and Quantum. Under the terms of the agreement, Future Tech will become the major operating entity of a newly formed Bell Microproducts subsidiary focused on the Latin American market.