Arrow Buys Interest in Marubun; Bell Acquires Forefront Graphics

Electronic News, June 4, 2001 by Rob Spiegel

In separate announcements last week, Arrow Electronics of Melville, N.Y., purchased 5.2 percent of the outstanding shares of Marubun Corp., a Tokyo-based electronic components distributor, and Bell Microproducts Inc. of San Jose acquired the privately held Forefront Graphics Corp. of Toronto, a distributor of media technology.

Arrow (nyse: ARW) bought the Marubun shares from several financial institutions in a series of privately negotiated transactions. Arrow representatives characterized the investment as a move to strengthen the strategic partnership between the two companies that began three years ago when they formed Marubun/Arrow to serve Japanese customers with manufacturing facilities in North America and the Asia/Pacific region.

The investment takes Arrow deeper into the Japanese market. "I think Arrow is trying to get a stronger foothold in Japan, and probably the best way to do it is by getting an interest in a Japanese company," said George Perris, founder and president of Sierra Marketing Group in Rocklin, Calif. "Japanese customers will be more likely to buy from a Japanese company, even if it is partially owned by a global U.S. company, so it's certainly a great strategic move for Arrow. If Arrow opened a Japanese facility of its own, I don't think they'd be successful."

Marubun closed 2000 with $1.5 billion in sales. The company is the largest nonaffiliated franchised distributor of electronics and supply-chain services in Japan. The company has almost 1,000 employees, and its stock is traded on the Tokyo Stock Exchange.

Bell Microproducts (nasdaq: BELM) representatives explained that the purchase of Forefront is meant to help Bell serve its graphics and audio/visual customers while also giving the company a strong presence in Canada. "The Forefront acquisition represents yet another step in Bell Microproducts' ongoing transition from a traditional component distribution model to a solutions provider model," said Don Bell, president and chief executive officer of Bell. "Forefront will become part of Bell Microproducts Canada and will remain as a separate operating unit retaining the Forefront Graphics name and its sales, marketing and technical staff."