Bolstering its position in the Latin American market, Arrow Electronics Inc. today acquired a 70% interest in the Elko Group, the largest distributor of electronic components in Argentina.
Elko is Arrow's second such investment in South America. In May, Arrow picked up a 66% share in Panamericana Commercial Importadora, of Sao Paolo, Brazil.
Arrow's new investment, which will be known in the future as Elko/Arrow, is based in Buenos Aires. Employing more than 50 people, Elko generated sales of about $14 million in 1998. The company's line card includes, among other semiconductor manufacturers, Philips, Motorola, National, Hewlett-Packard, and STMicroelectronics. Its principal passive, electromechanical, and connector (PEMCO) lines include Kemet, AMP, Siemens, and Bourns.
"Our acquisition of the Elko Group constitutes the second step in our strategy to align Arrow with the leading electronics distributors in the emerging markets of Latin America," said Stephen P. Kaufman, Arrow's chairman and chief executive.
The lure of an emerging market, coupled with pressure from multinational suppliers and customers for materials-management services, is driving U.S. distributors' expansion into Latin America. Arrow's interest in Panamericana, a 28-year-old distributor with 1998 sales of $18 million, was prompted more by discussions with key customers and suppliers than by definitive market information, said Francis M. Scricco, the company's president and chief operating officer.
"We don't have hard numbers [on the size of the market], but we know for sure there's activity and that it's growing," he said. "Companies who are our global partners want us to be there. And we pretty much move in lock step with them."
Avnet, Bell Microproducts, and Richardson Electronics are among those U.S. distribution companies with a presence in Latin America.