OREANDA-NEWS. S&P Global Ratings said today that it affirmed its ratings on Phoenix, Ariz.-based electronics distributor Avnet Inc., including the 'BBB-' corporate credit rating. The outlook is stable.

The affirmation follows the company's ?691 million (about US$905 million) bid for Leeds, U. K.-based technology distributor Premier Farnell PLC.

The ?691 million bid for Premier Farnell represents about a 12% premium over the offer it received from Datwyler Technical Components UK Ltd. Although Avnet's offer is higher, there could be additional bids from Datwyler or other parties. But timing of this process is unclear at this point. We expect that Avnet will be prepared to finance the transaction, but we don't expect the company to issue any debt until it's clear that this bid has been accepted and all closing conditions are met, including regulatory approvals.

If the transaction were consummated at the proposed terms, we expect that Avnet's adjusted leverage (incorporating our surplus cash adjustment) would remain below 3x over the next 12 months. Avnet's leverage was about 1.8x as of April 2, 2016. Although we continue to expect weak demand in Avnet's its legacy storage and server segments to negatively impact its revenue performance and profitability, its current leverage provides support for the proposed acquisition while maintaining its shareholder return initiatives without affecting the rating.

Premier Farnell is a global, high-service distributor of technology products and solutions for electronic system design, maintenance and repair in Europe, the Americas, and Asia-Pacific. We believe the addition of Premier Farnell should help Avnet build its web presence and distribution capabilities with smaller customers and early stage product design engineers.

Our corporate credit rating on Avnet reflects the company's leading position, and large scale within the global electronics components and computer products distribution industry, good vendor relationships, and potentially countercyclical working capital investments. However, supplier concentration, low-margin characteristics, and volatile industry demand somewhat offset those factors.