Avnet, Inc., Arrow Electronics, Inc. and Schroder Ventures Consortium to Acquire VEBA Electronics.

Business Editors, High-Tech Writers

PHOENIX--(BUSINESS WIRE)--AUGUST 7, 2000

The Two Leading Global Electronic Components and Computer Products

Distributors Team with International Private Equity Group to Acquire

the Third Largest Distributor in Unprecedented Agreement

A consortium led by Schroder Ventures' funds and including Avnet, Inc. (NYSE:AVT) and Arrow Electronics, Inc. (NYSE:ARW) has agreed to purchase the VEBA Electronics Group from Germany-based E.ON AG (formerly VEBA AG).

E.ON will receive approximately $2.35 billion (2.6 billion euros) in cash, including the assumption of debt, for the Santa Clara, Calif.-based VEBA Electronics Group, which reported 1999 sales of $5.47 billion. The business consists of three main groupings: Wyle Components, Wyle Systems and Atlas Services in the U.S.; EBV Elektronik, WBC, Atlas Services (Europe), and Raab Karcher Electronic Systems (RKE) in Europe; and the global Memec group.

Under the terms of the agreement, Avnet, Inc. will acquire the Munich, Germany-headquartered EBV Group, comprised of EBV Elektronik and WBC, both pan-European semiconductor distributors, and Munich-based Atlas Services Europe, logistics provider for the EBV Group; and Nettetal, Germany-based RKE, a computer products and services distributor. The purchase price is approximately $740 million, including the assumption of debt, and will be financed by the issuance of a combination of debt and equity securities. The combined companies, with approximately 1,900 employees, reported 1999 sales of approximately $1.8 billion.

"The EBV Group is considered to be Europe's leading specialist semiconductor distributor and this acquisition will add considerable strength to Avnet's European operations," said Roy Vallee, Avnet chairman and CEO. "They possess a unique culture and a very successful business model, excellent management practices, and place a special focus on a limited number of supplier relationships. The EBV Group will inherit a world-class IT infrastructure as well as our e-commerce capabilities, Avnet's global presence, our leadership in supply-chain integration and our relationships with leading suppliers, which will expand the EBV Group's service offerings, and produce economies of scale," Vallee said. "Avnet will gain talented employees and best practices, highly developed supplier and customer relationships, and increased European revenue, profits and market share."

"EBV and WBC will continue to market separately under the umbrella of Avnet Electronics Marketing's EMEA organization," said Brian Hilton, co-president of Avnet Electronics Marketing/ Global. Axel Hartstang, president and CEO of the EBV Group, as well as George Smith, president of Avnet Electronics Marketing/EMEA, will report to Hilton. Atlas Services Europe which is lead by CEO, Peter Gurtler, will continue to perform logistic services in support of the combined businesses. "We strongly believe that the EBV Group's business model, when combined with Avnet's global strengths, will contribute to our success in the growing European electronics market and strengthen Avnet's ability to serve global customers and suppliers," Hilton said.

RKE Systems -- a value-added distributor of computer systems and subsystems serving 11 European countries -- will operate as part of the Avnet Computer Marketing (CM) and Avnet Applied Computing (AAC) operating groups. "RKE Systems, led by Jurgen Peter, is complementary to Avnet's strategies and brings critical mass to Avnet's computer products and services businesses in Europe," Vallee said. "From RKE, Avnet CM will gain an important new supplier, EIZO, which manufactures computer displays, and will also enjoy expanded volume in Compaq servers, while AAC will expand its European business, primarily in disk drives and related subsystem products.

"We anticipate that the addition of these businesses will be accretive to earnings within the first year," Vallee said. The transaction is subject to customary regulatory approvals and is expected to close during the fourth calendar quarter of this year.

Phoenix, Arizona, USA-based Avnet, Inc. (NYSE:AVT), a Fortune 500 company with annual sales exceeding $9 billion, is one of the world's largest distributors of semiconductors, interconnect, passive and electromechanical components and computer products from the leading manufacturers. Serving customers in 60 countries, Avnet markets, inventories and adds value to these products and provides world-class supply-chain management and engineering services.