Q&A: Inside the Avnet, itX deal

Avnet Technology Solutions GM Gavin Lawless (pictured) has told CRN that the distributor had been in discussions to acquire fellow distie itX for some two years prior to making its $77.5 million bid to acquire ASX-listed distributor.

Today, Lawless spoke with CRN's Negar Salek about the months leading up to the deal.

CRN: How far along is the deal?

Gavin Lawless: The most critical part of this is that whilst we've made an offer, we actually have not yet acquired itX. It still has to go to the shareholder vote and then get shareholder approval.

Unfortunately with itX being a listed company, the approval is a little more complex and will take a good few months.

So, whilst the prospect of us being successful is fairly exciting, the reality is that like any potential acquisition there are chances that we may not be successful.

CRN: How long has Avnet been interested in itX?

GL: We've been talking with itX for a couple of years and those early discussions have obviously become more meaningful over the past six months.

CRN: Why itX?

GL: itX is attractive for us on many fronts, and I wouldn't say there was one particular area that was more attractive than the other. I think if you look at the itX organisation, and if you look at the Avnet organisation, they are  very complementary. We have similar go-to-market [strategies], we have very few overlapping vendors and we're similar sized businesses, so there's a lot of itX that was very attractive for us.

CRN: How will the merged operation operate if the deal goes ahead?

GL: It's very tricky. There's no point in spending hours planning all these things when the reality is there is no certainty that something will go ahead. While we do have some internal plans, the reality is [that] we have to wait until the deal hopefully get consummated, and then we'll start planning more seriously.

When you're merging two organisations like itX and Avnet - which are of similar size - it needs to be very collaborative. So it would be silly of us to start making plans without huge involvement from itX and we can't do that until the deal is done.

CRN: Will itX remain an Australian public company?

GL: If we get shareholder approval, itX would delist in Australia and become part of Avnet Australia.

CRN: itX includes Briell Marketing, a distributor of specialised printers; Sydmed,  a distributor of medical devices; and ICO, which provides IT hosting solutions. Are these new areas for Avnet?

GL: Well certainly in Australia [it's new]. [But] Avnet has many diverse businesses around the world, so it's fair to say that these businesses aren't totally new to Avnet but certainly they would be for us in Australia.

CRN: Would the ICO hosting business compete with resellers?

GL: It's too early to tell, because we haven't had the luxury of sitting down with itX to plan ahead.

CRN: When are you expecting the deal to close, if it goes ahead?

GL: We're hoping that if all things run smoothly, by the beginning of January we'll be able to operate as a merged entity.

CRN: What's the next step?

GL: Its business as usual. We operate the business as though there was no change and so does itX. Nobody can afford to take the eye off the ball. There are still a lot of unknowns and there is no guarantee that this will eventually happen, so there is no point in getting hung up on if it happens or if it doesn't happen.

Hopefully if it all happens in January we can all get excited and start making big plans.