Zacks_Analysts' Blog : Arrow Acquires Richardson RFPD - Analyst Blog

Arrow Electronics Inc. (ARW) completed the acquisition of RF, Wireless and Power Division of Richardson Electronics Ltd. (RELL) for $210 million.

Headquartered in LaFox, IL., RF, Wireless and Power is a leading value-added global component distributor and provider of engineered solutions assisting the global radio frequency (RF) and wireless communications market. The division employs 400 people.

Richardson RFPD has a line card of more than 80 leading RF and wireless component manufacturers. The company caters to manufacturers of RF power transistors, passive and connector products, low-power components, amplifiers and digital broadcast components.

Richardson RFPD generated $350 million of sales in fiscal 2010. Management stated that Richardson RFPD will operate as an independent unit even after the acquisition. The transaction is expected to increase earnings by 10 to 20 cents per share in the first full year of operations.

On the other hand, the strategic acquisition will enable Arrow to expand its portfolio of value-added services with a global presence in the wireless and power conversion markets, having superior growth exposure to the Asia-Pacific market.

Earlier, Arrow’s Board of Directors had approved a share repurchase of $50 million.

In January 2011, Arrow completed the acquisition of Nu Horizons Electronics, a leading global distributor of advanced technology semiconductor, display, illumination and power solutions. The purchase price was $7.00 per share.

Employing approximately 650 employees, Nu Horizons generated sales of $671 million in fiscal 2010. The transaction is expected to become accretive to earnings in the first full year of operations by 5–10 cents.

Arrow Electronics has chalked out a plan for growth through small and disciplined acquisitions. Electronic components and computer products distribution is a low-margin business and Arrow, being a player in that market, heavily depends on acquisitions.