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Apollo Raises Tech Data Bid After Warren Buffett's Berkshire Hathaway Makes Acquisition Offer

Berkshire Hathaway, sitting on over $128 billion in cash, made the bid for Tech Data in a matter of days in part by just changing terms of the original Apollo Global Management bid, but Apollo quickly upped its offer to purchase the distribution giant.

Warren Buffett's Berkshire Hathaway last week made a bid for Tech Data that ultimately was rejected by the distributor after its original suitor, Apollo Global Management, increased its offer.

Apollo Global Management in mid-November unveiled an offer to acquire Tech Data in a deal that valued the Clearwater, Fla.-based distribution giant at $5.4 billion, or $130 per share.

However, the acquisition bid had a go-shop provision that allowed Tech Data to discuss competing offers, which led to a new bid last week by Berkshire Hathaway for $140 per share.

[Related: 8 Big Things To Know About The $5.4B Apollo Global Management-Tech Data Deal]

Tech Data declined to discuss any changes in the acquisition bid.

Both CNBC and the Wall Street Journal reported Friday that Warren Buffett, chairman and CEO of Omaha, Neb.-based Berkshire Hathaway, last week offered to acquire Tech Data for a grand total of about $5 billion, excluding debt. Both organizations talked with Buffett himself. CNBC said the offer was for $140 per share.

Buffett, in the WSJ, called Tech Data his kind of business. "I may not understand all of the products that they sell and I may not understand what the customers who buy the products do with them, but I do understand the middleman's role," he told the WSJ.

Both news outlets said Buffett prefers to avoid bidding wars despite sitting on a hoard of cash worth over $128 billion as of September 30.

CNBC further reported that Bank of America originally brought the idea of an acquisition of Tech Data to Berkshire Hathaway, and that the company's bid was put together in a matter of days. Bank of America Securities was financial advisor to Tech Data in the original Apollo Global Management offer.

Tech Data officially on Nov. 13 unveiled its plan to acquire Tech Data for $130 per share, nearly a month after speculation that Apollo was planning to make the acquisition.

According to CNBC, Todd Combs, Berkshire Hathaway's investment manager and potential successor to Warren Buffett, on November 19 learned that Tech Data was available, and the following day Buffett outlined a possible offer. On November 22, the vice chairman of Berkshire met with Tech Data management, and on November 23 made a formal offer of $140 per share.

Tech Data on November 24 accepted the Berkshire Hathaway bid, but was thwarted on November 27 when Apollo Global Management increased its bid to $145 per share, valuing Tech Data at $5.14 billion, excluding debt.

The Berkshire Hathaway deal was made so quickly because the company essentially modified the original Apollo deal with a few changes without involving lawyers, CNBC reported.

Buffett will not make another bid, CNBC said.

Tech Data CEO Rich Hume, in a letter to Tech Data employees dated November 27 and filed with the SEC, reported the increased bid by Apollo Global Management after receiving an offer from another bidder he did not name.

Hume in the letter also reiterated the plan to keep changes at Tech Data to a minimum after the acquisition closes some time in the first half of 2020.

"Importantly, as I said before, Apollo clearly recognizes the talent and commitment of our team and believes our capabilities and global infrastructure provide a great platform for growth. We will become a privately held company following the close of the transaction, and we will continue to be headquartered in Clearwater, Florida, and operate under the Tech Data name. Our management team is expected to remain in place and we will continue to run our businesses as we always have. The transaction is expected to close in the first half of calendar year 2020, subject to customary closing conditions and the receipt of required regulatory approvals," Hume wrote.

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