Synnex CEO Kevin Murai is even more confident after meeting the Westcon Americas team that his company's proposed acquisition will increase value for vendors and channel partners alike.
"Spending additional time [with Westcon-Comstor] has only validated my belief regarding the common vision and value we bring to the markets," Murai told Wall Street analysts Thursday. "Our teams are energized, and they realize we must keep raising the bar to continue to exceed our partner and customer expectations."
Murai said the $830 million deal would provide Synnex's existing channel partners with a global platform, and provide them with access to deep capabilities and strength in the security, networking, and unified communications and collaboration market. Synnex doesn't have any presence in Latin America today.
Murai said the Fremont, Calif.-based distributor will decide closer to the closing date whether to pay for Westcon Americas with 4.56 million shares of Synnex stock or $500 million in cash. The deal also includes a mandatory $130 million cash payment, as well as an earn-out of up to $200 million if certain financial targets are met through February 2018.
Synnex will access the overall availability of credit when assessing whether to pay for Westcon Americas using cash or stock, Murai said. Going the stock route would give Westcon parent Datatec – which will continue to own and operate Westcon in Europe, the Middle East, Africa and Asia-Pacific – a 10.25 percent stake in Synnex.
"We only have that choice if the stock is above a certain level, which today it is, but there are other factors other than the economics and the stock price," Murai said.
Synnex is only allowed to substitute cash for stock if its stock is trading above $113.78 for 20 consecutive days leading up to the deal's close, according to the share purchase agreement. The company's stock has been trading above that amount since June 6, when the acquisition was announced.
Synnex saw revenue in the quarter ended May 31 climb to $3.94 billion, up 16.5 percent from $3.38 billion last year. That beat Seeking Alpha's estimate of $3.72 billion.
Net income soared to $73.1 million, or $1.83 per diluted share, up 64.9 percent from $44.4 million, or $1.11 per diluted share, last year. On a non-GAAP basis, net income jumped to $83.2 million, or $2.08 per share, up 51.9 percent from $54.8 million, or $1.37 per share, last year. That crushed Seeking Alpha's projection of $1.79 per share.
Synnex's stock inched ahead $0.62 (0.51%) to $122.46 in after-hours trading. Earnings were released after the market closed Thursday.