SYNNEX Announces Merger with Tech Data

Financial Information ($USD)

• Enterprise Value: $7.2 Billion
• EV/LTM Revenue:  0.20x
• EV/LTM EBITDA: 9.50x

Transaction Details

• Leading distributor SYNNEX Corporation (NYSE: SNX) today announced that it will merge with fellow distributor, Tech Data, in a deal worth approximately $7.2 billion, including net debt.
• The deal creates a distribution behemoth with approximately $57 billion in annual revenues and $1.5 billion in EBITDA, and more than 22,000 employees.
• Apollo Global Management (NYSE: APO), which acquired Tech Data in June 2020, will receive 44 million shares of SYNNEX common stock in addition to the refinancing of existing Tech Data net debt and redeemable preferred shares of approximately $2.7 billion.
• Following the transaction, which is expected to close in the second half of 2021, the combined company will be majority owned by SYNNEX shareholders (55%) with Apollo owning the remaining 45%.
• SYNNEX shares closed up 6.5% today, in record territory at almost $110 per share.

martinwolf Analysis

• Go Big or Go Home: This transaction creates the world’s largest IT distributor, which at $57 billion in revenue is $10 billion larger than next biggest Ingram Micro (with $47 billion revenue in 2019). The combined business will serve over 150,000 channel partners across 100 countries, putting pressure on competitors in every market.
• Distribution Stays Red Hot: This is the latest mega-deal in the distribution space – Apollo bought Tech Data in a pandemic-spanning 8-month transaction valued at $5.9 billion in June 2020, while Platinum Equity announced its agreement to acquire Ingram Micro for $7.2 Billion in December. It also brings the two private equity heavyweights into (more) direct competition, as both look to dominate the distribution market.
• Greater than the Sum of the Parts: The transaction announcement cited $100 million in net optimization and synergy benefits in the first year, growing into at least $200 million in the year following. Neither company has announced specifics or outlined any planned layoffs, though increased margins post-transaction are a given.
• The View from the Ground: Taking particular note of this transaction are solution providers across the channel, with large players like CDW standing to benefit and smaller partners cautiously balancing their broadened sales portfolios with SYNNEX /Tech Data’s ability to exert even higher leverage. Going forward, this deal will further existing consolidation trends across the solution provider industry.

For more information about this transaction, click here to read the press release from SYNNEX Corporation.

*Financial information from the press release and FactSet.

 martinwolf was not the advisor in this transaction.