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Synnex splits in two with Concentrix getting its independence
Distributor is looking to gain more flexibility and focus by splitting away from the customer experience specialist Concentrix
US distributor Synnex has decided to split its business and spin-off Concentrix as a separately listed company with current shareholders getting a holding in each firm.
Synnex operates in the Americas and Japan but Concentrix, which the distie acquired back in 2006, is a customer experience specialist, sells globally with a decent level of business being generated in the UK.
Dennis Polk, Synnex president and CEO, said that the creation of two strong and independent public companies would benefit both businesses.
"The spin-off will provide each company with sharper strategic and managerial focus and enable Synnex shareholders to own and value each business separately," he said.
"We are very proud of our company and the returns we generated by investing in IT distribution and CX Services over our nearly 40-year history. We are equally proud to have these two businesses reach a point where they are industry leaders and positioned well to be successful standalone public companies," he added.
Synnex has indicated that following the split, which is expected to happen in the second half of 2020, it will be a $19bn revenue operation and operating along with Tech Data and Ingram Micro as one of the largest players in the US market and has plans for further investment.
One of the last times the firm struck out to bolster its position it spent $800m picking up the US operations of Westcon-Comstor in 2017 and took a minority investment in the international operations of the distributor, including the UK, for a further $30m.
The management teams following the split will see Polk holding onto his role as Synnex president and CEO, with Chris Caldwell, president of Concentrix, taking on the president and CEO role at that business. The plan is to fill out the rest of the Concentrix Board over the next few months as the clock ticks down towards the moment of separation.
"With Concentrix achieving its current scale and efficiency ahead of expectations, coupled with the market opportunities ahead of us, the appropriate time to separate is now. The separation of the two businesses will enhance each company's competitive position and accelerate significant value creation opportunities," said Caldwell.
As a standalone player Concentrix will be generating $4.7bn in revenues operating globally and expects it to be easier to drive sustainable and profitable growth.
The decision to split does not need a shareholder vote but will require the sign-off from the Board and Synnex has stated that until it goes through it is "business as usual".