PHOENIX - Avnet Inc. has agreed to acquire Memec Group Holdings LTD in a stock and cash transaction valued at $676 million, including the assumption of $194 million of Memec debt. Combined, the distributors will have annual sales of more than $8.5 billion.

Under the terms of the agreement, Memec investors will receive a total of approximately 24.011 million shares of Avnet common stock plus $64 million in cash. The transaction, which is expected to generate cost savings of $130 million annually, is scheduled to close in 60 to 90 days.

Memec, a privatelh held global distributor of semiconductors, had operating income of $63 million, on sales of $2.3 billion in 2004. adjusted to exclude certain non-recurring expenses.

Memec will be integrated into Avnet's Electronics Marketing Group.

In a press statement, Avnet chairman and CEO Roy Vallee said, "We are excited about the opportunity to significantly expand our presence in each of our existing three regions as well as gain entry into the important Japan market. ... [W]e expect to realize double-digit returns on this investment once the integration is complete."