Avnet prices $550 million convertible senior notes due 2030

PHOENIX - Avnet, Inc. (Nasdaq:AVT), a prominent player in the Electronic Equipment industry with a market capitalization of $4.3 billion, announced Tuesday the pricing of $550 million in convertible senior notes due 2030, increasing the offering size from the previously announced $500 million. The notes will bear interest at 1.75% per year, payable semi-annually. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value metrics, with strong financial health indicated by a current ratio of 2.43.

The electronic components distributor also granted initial purchasers an option to buy an additional $100 million in notes. The offering is expected to close around September 5, 2025, subject to customary closing conditions.

The notes will mature on September 1, 2030, unless earlier converted, redeemed, or repurchased. The initial conversion rate is 14.2313 shares of common stock per $1,000 principal amount, representing a conversion price of approximately $70.27 per share - a 35% premium over Avnet’s last reported share price of $52.05 on September 2.

Avnet expects net proceeds of approximately $535.3 million from the offering, or $632.8 million if the initial purchasers exercise their full option. The company plans to use about $100 million to repurchase approximately 1.92 million shares of its common stock concurrently with the pricing, with remaining proceeds going toward repaying a portion of its revolving credit facility. This share repurchase aligns with management’s aggressive buyback strategy, as highlighted by InvestingPro analysis, which also reveals the company’s impressive 13% free cash flow yield and consistent dividend growth over the past 12 years. For deeper insights into Avnet’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

The notes will not be redeemable before September 8, 2028. After that date, they may be redeemed under certain conditions, including if Avnet’s stock price exceeds 130% of the conversion price for a specified period.

Noteholders will have the right to require Avnet to repurchase all or any portion of the notes on September 1, 2028, at a price equal to the principal amount plus accrued interest.

The notes are being offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, according to the company’s press release statement.

In other recent news, Avnet Inc. reported its fourth-quarter 2025 earnings, surpassing analyst expectations with earnings per share of $0.81, compared to the anticipated $0.74. Revenue also exceeded forecasts, reaching $5.6 billion against the expected $5.36 billion. Despite these positive financial results, Fitch Ratings revised Avnet’s outlook to negative from stable, citing concerns about the company’s elevated leverage. Avnet’s EBITDA leverage was noted at 3.7x as of June 28, 2025, surpassing Fitch’s negative threshold of 3.0x, due to post-COVID semiconductor inventory challenges. In response to Avnet’s strong revenue, BofA Securities raised its stock price target to $50 from $48, while maintaining an Underperform rating. The company’s gross margin was 10.6%, slightly below BofA’s estimate of 11.0%, attributed to a higher mix of lower-margin sales in Asia. These developments highlight significant factors for investors to consider regarding Avnet’s financial health and market position.

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