Synnex, Tech Data Merge To Create $57B Distribution Titan
Synnex and Tech Data will create the world’s largest IT distributor through their $7.2 billion merger, which will be led by Tech Data CEO Rich Hume and 55 percent owned by Synnex shareholders.
Two of the world’s largest IT distributors will join forces to create a $57 billion giant with more than 150,000 customers and 22,000 employees.
The proposed $7.2 billion merger of publicly traded Synnex and private equity owned Tech Data will be led by Tech Data CEO Rich Hume (pictured), with Synnex President and CEO Dennis Polk serving as executive chair of the company’s board. The combined company will be 55 percent owned by Synnex shareholders and 45 percent owned by Apollo Global management, which bought Tech Data for $5.4 billion in June 2020.
“This is transformational for Tech Data, Synnex and the entire technology ecosystem,” Hume said in a statement. “Together, we will be able to offer our customers and vendors exceptional reach, efficiency and expertise, redefining the experience and value they receive.”
Synnex’s stock is up $11.80 (11.43 percent) to $115 in pre-market trading Monday, which is the highest the company’s stock has ever traded since going public in November 2003. The merger announcement didn’t disclose what the combined company will be called.
Synnex and Tech Data will create the world’s largest IT distributor through their merger, coming in nearly $10 billion larger than Irvine, Calif.-based Ingram Micro, which had $47.2 billion in sales in 2019. The merger is expected to close in the second half of 2021, and generate $100 million of optimization and synergy benefits in the first year after closing and some $200 million by the end of the second year.
The combined company will support more than 1,500 vendors and OEMs and serve customers in more than 100 countries across the Americas, Europe and Asia-Pacific regions. Prior to the deal, Clearwater, Fla.-based Tech Data had a global presence – including a particularly large footprint in Europe – while Fremont, Calif.-based Synnex was focused on North America and Japan.
The Synnex-Tech Data combination will have an 11-member board, including Hume, six members appointed by Synnex, and four directors initially appointed by Apollo. Two of the directors appointed by Apollo must be independent. The joint company had $1.5 billion of earnings before interest, taxation, depreciation, and amortization (EBITDA) over the past 12 months and some $4 billion of debt at close.
“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,” Polk said in a statement. MiTAC Holdings Corp., which with its affiliatates owns approximately 17 percent of Synnex, has agreed to vote its shares in favor of the transaction.
The companies said they’ll have best-in-class product offerings in some of technology’s highest growth product segments, including cloud, data centers, security, Internet of Things, services, 5G and intelligent edge. Synnex and Tech Data said they’ll benefit from highly complementary product line cards and the ability to bring comprehensive Everything-as-a-Service (EaaS) offerings to the market.
This is Tech Data’s second attempt to consolidate the IT distribution industry, coming four years after the company purchased Tempe, Ariz.-based Avnet’s Technology Solutions business for $2.6 billion to combine broadline and specialty distribution. Two-and-a-half years after the Avnet deal closed, Apollo agreed to take Tech Data private. The company had been publicly traded since May 1986.
Meanwhile, Synnex, in December, spun off its $4.7 billion Concentrix customer experience business into a separate, publicly traded company, allowing Synnex to once again become a pure-play IT distributor. That transaction essentially undid Synnex’s $505 million acquisition of IBM’s customer case (call center) business, which was announced in September 2013.