Zacks_Analysts' Blog : Arrow Expands in China with Seed - Analyst Blog

New York-based electronics parts distributor Arrow Electronics, Inc. (ARW) recently signed a definitive agreement to acquire all of the assets and operations of the distribution business of Seed International Ltd. in a move to strengthen its presence in China.

Headquartered in Beijing, China, Seed is a value-added distributor of embedded products with 14 offices across China. The company primarily distributes products of Texas Instruments (TI) products, and is well known in China as a strong technical service provider with Digital Signal Processor (DSP) specialization.

Employing 200 people with 100 in value-added engineering, Seed generated sales of $90 million in the latest fiscal year. The acquisition is subject to regulatory approval and is expected to close during the third quarter of 2011.

Earlier, Arrow Enterprise Computing Solutions (ECS), a business segment of Arrow Electronics reached a commercial agreement with EcoLogic Systems Ltd. to add virtual desktop infrastructure optimisation-as-a-service (OaaS) to its portfolio in the United Kingdom.

This agreement represents one of the first channel alliances addressing VDI deployments through managed services.The VDI OaaS solution is a fully integrated service providing network optimisation for improved performance for end-users.

In addition, the ECS segment signed a distribution agreement with Riverbed Technology in the Nordic region. Under the terms of the agreement, Arrow ECS will distribute Riverbed solutions in Sweden, Norway, Denmark, Finland, Estonia, Latvia and Lithuania. Management stated the addition of Riverbed will further enhance Arrow ECS’ solution-focused value-added distribution model in the Nordic region.

Riverbed has developed a strong alliance with Arrow ECS in the U.S., U.K., Germany and Austria. Management stated that the agreement with Arrow ECS in the Nordics will further expand the relationship while addressing the storage, applications and mobility opportunities in the Nordic markets.

Although Arrow, which competes with Avnet Inc (AVT), faced tough times between late 2008 – early 2009, its performance has been improving steadily since then. We expect overall demand and margins to improve as volumes ramp up.