‘Transforming’ the Tech Ecosystem
The combined company will control a team of more than 22,000 associates and roughly $57 billion in estimated pro forma yearly revenues.
"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,” said Dennis Polk, president and chief executive of SYNNEX.
Tech Data CEO Rich Hume said the business deal between his company and SYNNEX will “transform the entire technology ecosystem.” He added that the combined company will use the substantial financial power to invest in growing its core platform and other business projects related to cybersecurity, cloud, internet of things (IoT) technologies, and more.
"We could not have reached this milestone without the hard work of our colleagues, and we look forward to working together with the SYNNEX team to seamlessly bring our companies together and to create meaningful value for all our stakeholders," Hume added.
The IT products distribution company is currently owned by funds controlled by associates of Apollo Global Management, Inc and its co-investors. The new company will serve customers in over 100 countries across North and South America, Europe, and Asia-Pacific countries with a business portfolio of over 200,000 products and services.
According to the terms of the business deal, SYNNEX will pay 44 million shares of its common stock to Apollo Funds, plus refunding Tech Data’s current net debt.
After the deal is completed, SYNNEX shareholders will control around 55% of the combined company, while Apollo Funds will own the remaining 45%. Rich Hume will be the CEO of the combined business, with Dennis Polk serving as the Executive Chair of the Board of Directors.
In separate news, SYNNEX reported it made a net profit of $87.8 million in Q1. This amount translates into earnings of $1.69 per share for the California-based tech business.
On an adjusted basis, the company made a profit of $1.89 per share to top the $1.70 expected from Wall Street analysts. Business revenue for the quarter came in at $4.94 billion, which is higher than the $4.71 billion expected from the market analysts.
For the current quarter ending in June, the tech company said it expects its earnings per share to range from $1.80 to $2.
SYNNEX and Tech Data announced they are merging in a $7.2 billion deal, including net debt, to create a leader in IT product distribution. Separately, the California tech company reported better-than-expected business results for its Q1.
About the Author
Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.