The IT distribution network was shaken by Monday’s announced merger between Synnex Corp. and Tech Data, a deal valued at (including debt) approximately $7.2 billion.
Synnex shareholders will hold 55% of the combined entity, which will be led by Rich Hume, CEO of Clearwater, Florida-based Tech Data. The deal creates a $57 billion distribution behemoth, towering over the next-biggest competitor, Ingram Micro, at $47 billion.
“This is transformational for Tech Data, Synnex and the entire technology ecosystem,” Hume said. “Together, we will be able to offer our customers and vendors exceptional reach, efficiency, and expertise, redefining the experience and value they receive. 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.”
It was during that period of explosive growth that Apollo Global Management took Tech Data private in a $6 million deal. The pivot to joining forces–the combined companies have 22,000 employees based in more than 100 countries–will enable it to feast on even more opportunities while driving next-generation technologies.
Apollo will own 45% of the company. In addition to Hume taking the reins of CEO, Synnex President and CEO Dennis Polk will be executive chair of the board of directors. He will be instrumental in forging the ongoing strategy and oversee integration of the business. Synnex is based in Fremont, California.
“We are excited to partner with a world-class industry leader like Tech Data and believe that this combination will benefit all our stakeholders,” Polk said. “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.”
The companies cited a litany of compelling strategic benefits behind the merger, including:
- A diversified global solutions aggregator with significant breadth and depth of capabilities. The aforementioned global footprint of 100-plus countries across the Americas, Europe and Asia-Pacific regions will include a broad, diversified portfolio of more than 200,000 product and solutions offerings. This scale, they maintain, will provide increased value and purchasing efficiencies to the combined company’s 150,000 customers and more than 1,500 vendors. It also enables the combined firm to accelerate technology adoption and attract the world’s most innovative OEMs.
- The union capitalizes on premier core growth platforms and establishes best-in-class product offerings in next-generation, high-growth areas. The transaction combines each company’s core growth platforms to establish a differentiated end-to-end solutions portfolio and best-in-class product offerings in some of the largest, highest growth product segments including cloud, data centers, security, Internet of Things (IoT), services, 5G, and intelligent edge. The companies’ highly complementary product line cards and global distribution platform provide diversified revenue streams and cross-selling opportunities, including the ability to bring comprehensive everything-as-a-service (EaaS) offerings to the market.
- The deal also brings together companies with complementary cultures and a commitment to being an employer of choice in the global IT industry. Both Synnex and Tech Data have corporate cultures centered on innovation, agility, and customer service. These shared principles, as well as the expertise and talent from both organizations, will support a smooth integration following the close of the transaction (which is expected in the second half of 2021).
The parties anticipate net optimization and synergy benefits of $100 million during the first year after closing, with a minimum of $200 million by the end of the second year.
