Premier sells division to strengthen internet focus

The Leeds-based group also began the hunt for a new chairman after Sir Peter Gershon announced he plans to stand down at its annual shareholder meeting in June.

Sir Peter joined Premier's board in 2004 and became chairman in 2005. The group said he has indicated that he does not intend to stand for re-election at its AGM.

Premier, which distributes thousands of components ranging from microchips to batteries, said it has completed the sale of TPC Wire & Cable Corp to TPC Intermediate Holdings, a venture capital-backed vehicle owned by Pfingsten Partners LLC.

TPC is a leading US distributor of industrial wire and cable based in Ohio. Analysts at brokerage Evolution Securities said the sale was "good housekeeping".

Premier Farnell chief executive Harriet Green said: "This sale represents another step in Premier Farnell's strategic journey to shape its business to deliver profitable growth by focussing on the electronic design engineer and profitable MRO (maintenance, repair and operations) markets.

"This proven strategy is supported by continuing advances in the group's e-commerce and element14 community web channels which are further strengthening its multi-channel and increasingly web-centric proposition.

"We wish TPC and its employees well for the future."

Premier Farnell has increasingly been focusing on internet sales, in particular the high-spending electronic design engineer community.

In 2009 it launched element14, its "Facebook for engineers", an online social networking site that would allow engineers to exchange ideas.

Engineers are encouraged to click through to the group's main transactional website.

Named after silicon's position in the periodic table, element14 was also launched in Australia, China, India, Malaysia, Singapore and New Zealand in October.

Shares in the company were broadly unchanged at 289.9p yesterday.

Evolution Securities analysts said "whilst the deal is modestly earnings dilutive, we regard the move as a sensible one".

They added: "The business, which distributes specialist wire and cable in North America, is relative volatile. While revenues have bounced in the current year, revenues were materially down last year. We estimate historic revenues are in the region of $30m and earnings before interest and tax of $3.5m.

"Overall, we regard the move as a strategically sensible one, enabling the business to focus on the more attractive electronic design engineer market. It will take March 2011 net debt down to about 233m."