Synnex and Tech Data are merging in a technology distribution deal valued at $7.2 billion. The combined distributor, countering Ingram Micro, will have roughly $57 billion in estimated pro forma annual revenues and a team of over 22,000 employees.
This is technology M&A deal number 184 that ChannelE2E has covered so far in 2021. See all technology M&A deals for 2021 and 2020 listed here.
Private equity firm Apollo Global Management has owned Tech Data since mid-2020.
The Synnex-Tech Data merger creates global scale -- especially against Ingram Micro, which generated $47.2 billion in annual sales for 2019 (Ingram's 2020 results have yet to be announced).
Still, the Synnex-Tech Data combination also involves extensive overlap, especially in terms of cloud marketplaces that compete against Ingram Micro Cloud and emerging disrupters such as Pax8.
The combined Synnex-Tech Data business is expected to generate $200 million in "synergy benefits" within two years of the deal closing, but neither the distributors nor Apollo Global Management mentioned whether the synergies & cost savings will involve layoffs/staff cuts.
Update: An SEC filing from Synnex indicated that most of the cost savings will involve ERP and e-commerce system automation.
Synnex-Tech Data Merger: Five Business Details to Know
Among the key data points to understand, the combined businesses will support:
- More than 150,000 customers (mostly channel partners) and 1,500 vendors across more than 100 countries in the Americas, Europe and Asia-Pacific regions.
- Upon closing of the deal, Synnex shareholders will own approximately 55 percent of the combined entity, with Apollo Funds owning approximately 45 percent.
- Tech Data CEO Rich Hume will lead the combined company as CEO. Dennis Polk will be Executive chair of the board of directors and will "take an active role in the ongoing strategy and integration of the business, among other responsibilities," the announcement says.
- Net optimization and "synergy benefits of $100 million are expected in the first year after closing, achieving a minimum of $200 million by the end of the second year." The announcement didn't mention whether the expected synergy involves potential layoffs.
- The deal is expected to close in the second half of calendar year 2021, subject to Synnex stockholders and regulatory approvals.
Synnex-Tech Data Merger: Executive Perspectives
In a prepared statement about the deal, Synnex President and CEO Dennis Polk said:
"We are excited to partner with a world-class industry leader like Tech Data and believe that this combination will benefit all our stakeholders. 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."
Added Rich Hume, CEO, Tech Data:
"This is transformational for Tech Data, SYNNEX and the entire technology ecosystem. 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. 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."
Apollo Senior Partner and Co-Head of Private Equity Matt Nord and Apollo Partner Robert Kalsow-Ramos concluded:
"When we acquired Tech Data, we saw the tremendous potential for transformative growth and long-term value creation. This transaction will accelerate the momentum that was already underway by uniting two outstanding companies for greater scale and financial strength to lead the industry. We are excited to remain a part of the new company's continued success."
Ingram Micro: New Private Equity Owner
Meanwhile, Ingram Micro ownership also is in transition mode. Private equity firm Platinum Equity announced plans to acquire Ingram Micro from China’s HNA Group for $7.2 billion in December 2020. That deal is expected to be completed in the first half of 2021.
Once that deal closes, Ingram Micro CEO Alain Monié will continue to lead the distributor, and the company will remain headquartered in Irvine, California.
Amid the ownership transition, Ingram remains focused on three key pillars, Executive VP Paul Bay told ChannelE2E in November 2020. The pillars are:
- Win together.
- Transform the IT customer experience across the entire lifecycle.
- Deliver more solutions and more deeply engage the company’s global partner communities.
We'll be watching to see how the pending Synnex-Tech Data deal potentially counters Ingram on a regional and worldwide basis.
