Arrow Electronics Acquires A.E. Petsche

| About: Arrow Electronics (ARW)

Arrow Electronics, Inc. (NYSE:ARW) announced last month that it would acquire A.E. Petsche Company (“A.E. Petsche”), a leading provider of interconnect products, including specialty wire, cable and harness management solutions, to the aerospace and defense markets.

Headquartered in Arlington, Texas, A.E. Petsche distributes products in the United States, Canada, Mexico, the United Kingdom , France , and Belgium through 20 locations and has over 250 employees. The company recorded sales of $220 million in 2008.

The acquisition is expected to close by the end of 2009. Arrow expects that the acquisition will be accretive to 2010 earnings by 10 cents – 12 cents. Other financial terms of the agreement were not disclosed.

Management expects that the acquisition will add to the breadth of Arrow’s customer base and increase its staff of highly experienced sales professionals, while allowing for a variety of cross-selling opportunities with its existing business and other emerging markets.

Last month, Arrow reported weak results for the third quarter as profits plunged almost 83% on weak sales and restructuring costs. The company also provided a disappointing forecast due to limited visibility.

Business momentum is still muted and revenue growth and margin expansion are a few quarters away. Though the early signs of recovery improve business sentiments, IT spending is yet to pick up. The recovery is expected to be slow and steady and visibility is not clear - at least in the near-term. Orders are yet to return to normal levels.

In recent times, both ARW and rival Avnet Inc. (NYSE:AVT) have been acquiring smaller players all over the world to strengthen their businesses.

New York-based Arrow Electronics is one of the world’s largest distributors of electronic components and computing products. The company sources products from about 800 suppliers and distributes them to over 130,000 customers (original equipment manufacturers, contract manufactures and commercial customers).