Tech Data, a Clearwater-based IT distributor that was the Tampa Bay region’s largest publicly traded company before being acquired by a private equity firm in 2019, has agreed to merge with Fremont, Calif.-based SYNNEX Corp. in a deal valued at $7.2 billion, including net debt.
SYNNEX, with $24.68 billion in gross revenue in 2020, competes for many of the same customers as Tech Data. The combined company will boast about $57 billion in annual revenue and more than 22,000 employees, according to a news release.
In a Monday earnings call, the heads of both companies called the merger “transformative” and said it will meld the best qualities of both firms while significantly boosting financial and geographic strength.
“Combining our business with SYNNEX accelerates the momentum that was already under way that neither company could achieve independently,” said Tech Data CEO Rich Hume, who, under .he terms of the deal, will stay on and lead the combined company as its CEO. SYNNEX President and CEO Dennis Polk will become executive chair of the board of directors, a position that will see him take an active role in ongoing strategy and integration of the business, among other responsibilities.
“I and the entire SYNNEX management team have the utmost respect for the team at Tech Data and what they have created,” Ross said during the earnings call. “We are thrilled to partner with its 14,000-plus talented colleagues.”
Ross went on say that at first glance, the companies appear to be very similar, but “we are very complimentary to each other from a geographic perspective, OEM representation, customer segments served and services offered.” He also offered high praise for Hume, who took over as Tech Data CEO in 2018, succeeding longtime leader Bob Dutkowsky.
“I am pleased to partner with Rich Hume,” Ross said. “Rich is a talented leader with significant industry expertise and we are fortunate to have him as the CEO of the business, going forward.”
Hume said the deal allows the merged company to instantly acquire accounts in parts of the world where it didn’t have a large presence.
“Together, SYNNEX and Tech Data will have a global footprint that serves more than 100 countries across the Americas, Europe and Asia-Pacific,” he said. “This combination brings new market opportunities for both companies. For example, SYNNEX has a well-established presence in Japan, where Tech Data does not. Similarly, Tech Data is a well-established business across Europe, where SYNNEX has more limited access.”
According to other terms of the deal, Apollo Global Management, the New York-based private equity group that owns Tech Data, will own 45 percent of the combined company’s shares, while SYNNEX stockholders will own 55 percent. Apollo 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.
Also, the companies will continue to operate as separate entities until the deal, which is subject to regulatory and shareholder approval, closes in the second half of the year.
“When we acquired Tech Data, we saw the tremendous potential for transformative growth and long-term value creation,” Apollo Global Management Senior Partner Matt Nord stated in the release. “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.”
Hume, speaking during the earnings call, said the deal was also made with an eye toward a post-pandemic future, when return-to-office trends will “contribute to explosive growth” in “areas that we are ideally positioned to serve.” He added, via the release, “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.”