Avnet has bought the enterprise infrastructure division (EID) of Magirus Group following approval from the European Commission, giving it a monopoly over System i hardware distribution in the UK.

The acquired business, with annual revenues of $500 million, is a value-added distributor of IBM and Hewlett-Packard enterprise computing products in seven European countries and Dubai, and is to be slotted into Avnet Technology Solutions. Avnet Technology Solutions is an operating group of Avnet Inc representing US$6 billion in annual revenues for 2007, with locations in over 30 countries. The integration of the acquired business in Europe is expected to be complete by June, 2008.

Matthew Gower, Avnet Technology Solutions’ vice president of sales for the UK, Ireland and the Nordics, says: “As sole distributor for System i, the focus is on continued growth of the brand by providing value add support to the System i business partners. The joint skills of Avnet and what was formerly Magirus EID, working in combination rather than in competition, means the support we can now provide is much richer.”

How strong does System i figure in Avnet? And how strong is it going to figure? “Within the IBM business group of Avnet Technology Solutions, System i represents around 20% so it remains a strategically important brand for us,” says Gower. “Moving forward, we’re looking at growth across the whole IBM business including System i so the percentage may stay the same but it will be 20% of a bigger number.

“We have already started a number of activities to drive growth for System i. We’re putting increased activity on driving lower-end boxes into the SMB space through collaboration with ISVs and applications that port to System i. We have also just announced a joint initiative, ‘Lease of Life’, with LANSA to remove the barrier to System i modernisation.”

Lease of Life is a bundle of new System i hardware, software and consulting services that makes it possible to modernise an entire legacy environment in a single action. LANSA and Avnet have pooled their System i expertise to develop an ROI Calculator that helps managers to determine which modernisation approach offers the best return and shortest payback period.

Roy Vallee, Avnet’s chairman and chief executive officer, says: “This acquisition positions Avnet Technology Solutions as Europe’s largest value-added IT distributor for enterprise solutions with the broadest capabilities in the market. Following completion of the recently-announced Acal IT Solutions acquisition, Avnet Technology Solutions will have $2.5 billion of annual revenue in the region and possess unique scale and scope advantages that further enhance Avnet’s value proposition to our trading partners. In support of Avnet’s strategy to enable complete solutions, we will continue to pursue value-creating acquisitions that expand our customer base and/or broaden our products and services portfolio.”

Avnet Technology Solutions has now increased its presence in Germany and UK, while expanding its operations in six additional countries. The addition of 140 employees and 1,300 value-added reseller customers presents additional opportunities for cross-selling, says the firm.

The purchase of Acal does not have any direct impact on System i. However, once the acquisition is complete, there will be a great opportunity to build System i-centric solutions which incorporate some of the documents management and wireless networking solutions available from the Acal Division and, of course, there will be access to a broader number of resellers new to IBM and System i products. “In short, the acquisition provides us with a greater opportunity to sell System i products and solutions,” says Gower.

Frank Booty, industry reporter