maxsattana - stock.adobe.com

Tech Data merges with Synnex

Tie-up between Tech Data and Synnex would see a combined operation with more than $57bn revenues and a global reach

Tech Data has continued to show its determination to become one of the largest names in global distribution, through the move to merge with Synnex.

The distributor has entered into a definitive $7.2bn merger agreement with Synnex that will create a combined operation with revenues in the region of $57bn and a headcount of around 22,000 staff.

The highlighted positives of the tie-up include cross-selling opportunities and a chance to build on the commitment to cover growth areas, including cloud, datacentre, security, internet of things (IoT), 5G and intelligent edge technologies.

Although Synnex is primarily based in the US, the deal was also described as having benefits across all Tech Data markets by adding depth to support its vendors and partners.

The terms of the deal will see Tech Data’s owner, Apollo, take ownership of 45% of the combined entity and use it as an opportunity to refinance the distributor’s existing net debt. If all goes to plan, the deal will close in the second half of 2021.

“This is transformational for Tech Data, Synnex and the entire technology ecosystem. Together, we will be able to offer our customers and vendors exceptional reach, efficiency and expertise, redefining the experience and value they receive,” said Tech Data CEO Rich Hume.

“The combined company will also benefit from significant financial strength to invest in its core growth platform, as well as next-generation cyber security, cloud, data and IoT technologies, which are experiencing explosive growth due to work-from-home and return-to-office trends,” he added.

In response, Dennis Polk, president and CEO of Synnex, said Tech Data was a global player that would give the combined operation more muscle.

“This is transformational for Tech Data, Synnex and the entire technology ecosystem. Together, we will be able to offer our customers and vendors exceptional reach, efficiency and expertise, redefining the experience and value they receive”
Rich Hume, Tech Data

“This transaction allows for accelerated revenue and earnings growth, an expanded global footprint, and the ability to drive significant operating improvements while continuing to create shareholder value,” he said. “We look forward to working with the talented colleagues at Tech Data and expect our combined business will create the opportunity for team members to produce the highest levels of service to our partners.”

Hume will lead the combined firm, with Polk taking a position as executive chair of the board of directors, with an expectation that he will take an active role in the integration of the businesses.

The firm indicated that it expected net optimisation and synergy benefits of $100m in the first year after closing the deal, with a minimum of $200m by the end of the second year.

Apollo’s senior partner and co-head of private equity, Matt Nord, and partner Robert Kalsow-Ramos said it had recognised, at the start of its investment, that there were opportunities for expansion.

“When we acquired Tech Data, we saw the tremendous potential for transformative growth and long-term value creation. This transaction will accelerate the momentum that was already underway by uniting two outstanding companies for greater scale and financial strength to lead the industry. We are excited to remain a part of the new company’s continued success,” they stated.

Tech Data has already used acquisition as a means of adding more depth to its global presence, having picked up Innovix Distribution in September 2020 to increase its presence in the Asia-Pacific region and expand the business in Hong Kong, Malaysia and Singapore.

Read more on Finance and Credit

ComputerWeekly.com
ITChannel
Close