Jaco--- Here is some interesting info. on the sector where they do their business.
(For private use only)
From Electronic News--March 29, 1999
Acquisitions Ahead for Distributors
As shelf sharing restrictions ebb, consolidations loom
By Bernard Levine
New York--The continuing demise of shelf-sharing restrictions could soon trigger blockbuster acquisitions among leading North American electronics distributors, industry experts predict.
Sparked by top-ranked distributor Arrow's recent acquisition of Bell Industries' distribution unit, analysts say other distribution powerhouses such as Avnet, Future or Wyle might now feel free to acquire a competitor loaded with Far East semiconductor lines, much like Arrow just did.
"There will be major acquisitions and linecard fallout stemming from the end of shelf-sharing restrictions," predicts George Perris of Sierra Marketing Group. "Now is the time for the largest global distributors to position themselves to take on Far East suppliers and certainly one way for them to achieve this goal would be to continue the acquisition process of such distributors with a large content of Far East suppliers on their linecards."
Conversely, distributors such as Marshall and others which until now concentrated on Far East IC lines could be thinking of acquisitions or other ways to add more domestic lines, industry executives and analysts suggest. There have been unconfirmed reports for months that second-ranked Avnet is contemplating a large North American acquisition.
Arrow's recent purchase of Bell may be remembered as one of the final blows to the age-old shelf sharing strictures. As a result of that deal, capacitor maker AVX responded by backing off its long-held policy not to share the shelf with capacitor rival Kemet (EN, March 8).
"The trend clearly is that shelf sharing is becoming less of an issue than just a year or so ago," said Robert Damron, equity analyst with Cleary Gull. "AVX loosening its shelf-sharing policy is one recent example. That there has yet to be any news regarding Motorola may mean no news is good news and in fact we may see other distributors that carry Motorola make some acquisitions of distributors carrying Asian lines. Consolidation in the industry will continue and this will help facilitate that."
According to Ben Schwartz, Jaco's VP of strategic marketing, the Arrow-Bell deal and related matters "seem to be transitioning along at a smooth pace and should it continue, I would expect to see other Motorola distributors take necessary steps to protect their linecards as well."
However, many sources caution that there are no guarantees regarding how Motorola or other suppliers might react in the future. Should it turn out that more restrictive impulses come forward, Arrow may have to do some fancy organizational footwork in response. If Arrow's acquisition gambit works and it keeps Bell's band of Japanese and Korean IC lines basically intact -- although in a separately maintained unit -- many think Avnet, Future, Wyle and other leading North American distributors will probably be entitled to similar treatment.
If things continue smoothly for Arrow, "it totally changes the complexion of the distribution industry's consolidation trend," said Clarke Walser, principal with
Walser & Associates. “Until now, there has been a de facto barrier in that many top distributors were precluded from acquiring Japanese lines, while Marshall and others were prevented from getting involved with firms like Motorola, Intel and National. I would think every distributor with a shopping list of possible acquisitions will have a new and larger acquisition list if Motorola's policy changes because they can think about companies they couldn't think about before.”
Customers stand to benefit, he added. “I've said for years shelf sharing restrictions are ridiculous. They don't serve the customer.”
Smaller distributors could also benefit, Perris contends. “The breakdown of shelf sharing and the possible new acquisitions that result should be a boon to the second tier distributors, because in no way can the global distributors give proper attention and focus to the large number of lines they may now find themselves with on their linecards. I can envision lots of opportunities opening up for the second tier distributors to acquire some lines not large enough for the global distributors to focus on.”
This makes Jaco a prime target.
Good investing
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