SYNNEX Corporation and Tech Data announced they have entered into a definitive merger agreement under which SYNNEX and Tech Data will combine in a transaction valued at approximately $7.2 billion, including net debt. The combined company, with approximately $57 billion in estimated pro forma annual revenues and a team of over 22,000 associates and colleagues, will provide customers and vendors with expansive reach across products, services, and geographies to accelerate technology adoption.
Other distributors and channel partners will need time to digest the actual outcomes to gauge how it will affect them. It should be good news for some and bad for others. All will need to think differently, adapt, pivot, plan and execute with all hands on deck to safely navigate to a brighter future.
Distributors are consolidating bigger, because they probably see it as either a survival or competitive play. I think deep down, it’s about “survival of the fittest” by becoming too big to fail. While this is happening, Cloud Distributors and Marketplaces are sprouting up everywhere and growing fast. With big money behind large distributors, you can be assured that they will adapt by changing the rules of the game to best suit their interests and get more leverage from vendors.
Channel partners could see prices go up eventually but that may not be such a big deal as end-users will have to pick this up the increase. However, that may not happen as do not forget about Ingram Micro and the other distributors like D&H, WestCoast etc. All distributor players are definitely watching this game closely and they will all adapt. Do not be surprised if you see another round of consolidation happening outside of the big players. As the saying goes…We will see :o)
The combined company will have a global footprint that serves more than 100 countries across the Americas, Europe and Asia-Pacific regions, and a broad, diversified portfolio of more than 200,000 product and solutions offerings. This meaningful scale will provide increased value and purchasing efficiencies to the combined company’s 150,000 customers and more than 1,500 vendors and enable it to accelerate technology adoption and attract the world’s most innovative OEMs
“We are excited to partner with a world-class industry leader like Tech Data and believe that this combination will benefit all our stakeholders,” said Dennis Polk, SYNNEX President and CEO. “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. 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.”
“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 Rich Hume, Tech Data CEO. “The combined company will also benefit from significant financial strength to invest in its core growth platform as well as next generation cybersecurity, cloud, data, and IoT technologies, which are experiencing explosive growth due to work from home and return to office trends. We could not have reached this milestone without the hard work of our colleagues, and we look forward to working together with the SYNNEX team to seamlessly bring our companies together and to create meaningful value for all our stakeholders.”
Apollo Senior Partner and Co-Head of Private Equity Matt Nord and Apollo Partner Robert Kalsow-Ramos said, “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.”
Under the terms of the agreement, Apollo Funds will receive an aggregate of 44 million shares of SYNNEX common stock plus the refinancing of existing Tech Data net debt and redeemable preferred shares of approximately $2.7 billion. Upon closing of the transaction, SYNNEX shareholders will own approximately 55% of the combined entity, with Apollo Funds owning approximately 45%.
The transaction is expected to close in the second half of calendar year 2021, subject to the satisfaction of customary closing conditions, including approval by SYNNEX stockholders and regulatory approvals.