U.K’s Premier Farnell Jumps on Post-Brexit Avnet Counterbidby
U.S. company offers $909 million, trumping Swiss Daetwyler
Premier Farnell withdraws recommendation for Daetwyler offer
Premier Farnell Plc, the U.K. supplier of the Raspberry Pi mini-computer, soared in London trading after electronics distributor Avnet Inc. trumped Switzerland’s Daetwyler Holding AG with a takeover offer made cheaper after the Brexit vote.
Avnet agreed to buy Premier Farnell for 691 million pounds ($909 million) in cash, 12 percent higher than the 615-million-pound bid that Daetwyler unveiled nine days before the U.K. voted to leave the European Union. The outcome of the poll weakened the pound against the dollar, meaning that Phoenix, Arizona-based Avnet now is paying $66.5 million less than it would have had the U.S. company jumped in when Daetwyler struck its deal.
Premier Farnell’s board plans to unanimously recommend the offer to shareholders and is no longer supporting Daetwyler’s proposal, the U.K.-based company said a statement Thursday. Daetwyler has taken note of Avnet’s counterbid and is considering its options, a representative of the company said by phone.
Premier Farnell surged 19 percent to close at 195 pence in London, higher than the 185-pence-a share offer price, in a sign that some investors expect another bid. Shares of Avnet rose 0.1 percent to $40.89 in the U.S., valuing the company at $5.3 billion.
The tussle for Premier Farnell shows how U.K. companies have become more attractive to international buyers in the wake of a weakening of the local currency. Since the June 23 vote that sent shock waves throughout Europe, Japan’s SoftBank Group Corp. has agreed to buy semiconductor designer ARM Holdings Plc and Chinese billionaire Wang Jianlin’s company cited Brexit as a catalyst for an agreement to buy Odeon & UCI Cinemas Group for $1.2 billion.
Buying Premier Farnell will bring online services to its supply chain, Avnet said in a statement. Avnet and Daetwyler’s moves on Premier Farnell are efforts to consolidate the fragmented European electronic-components distribution market.
Combining the businesses should lead to procurement savings and also increase revenue as the companies sell each others’ products, the companies said. The deal should add to Avnet’s earnings per share as soon as it is completed, according to the statement. Premier Farnell’s Raspberry Pi computers are programmable and were designed to help people with coding.
Even before the June 23 referendum, the pound had begun to weaken against other currencies. Daetwyler Chief Executive Officer Paul Haelg said in announcing the 165-pence-a-share deal that the currency move made the transaction more attractive. Asked about the currency drop, an outside spokeswoman for Avnet said the company had no comment beyond the statement.
Bank of America Merrill Lynch acted as financial adviser to Avnet and Gibson Dunn & Crutcher LLP was the company’s legal counsel. Lazard Ltd. advised Premier Farnell.