Tech Data, Synnex merger creates $57bn business
Two of the world’s largest IT distributors, Tech Data and Synnex, have agreed to merge in a deal that is set to create a $57 billion business.
The deal comes nine months after the completion of Tech Data’s acquisition by Apollo Global Management in June 2020 when the distributor became a private company.
Under the terms of the merger, Apollo Global Management will take a 45% ownership in the combined business and the other 55% will belong to Synnex shareholders.
Tech Data boss Rich Hume will become CEO of the combined operation while his counterpart at Synnex, Dennis Polk, will assume the role of executive chair of the board of directors.
Speaking about the merger in a conference call, Polk said it accelerated the distributor’s growth initiatives “by multiple years” compared to what it could have done by acquiring several smaller geographically diverse companies.
“Even with a well-planned and executed strategy, I’m not sure we could have achieved over time all that is accomplished with this merger,” he claimed, adding the deal was a significant opportunity to grow faster than market rates.
Hume and Polk claimed the merger was very complementary in terms of geographical locations, vendors, partners and services. Hume said the combined business would have a global footprint serving more than 100 countries with more than 200,000 products and solutions.
The merger presented new market opportunities for both companies, he added. Europe is one of the areas where Tech Data is already well-established but Synnex has a more limited presence. On the other hand, Synnex is well-established in Japan but Tech Data is not.
Hume said the customer sets were “quite complementary. The overlap isn’t as significant as one might think”.
The combined business shared a common vision to invest in areas like cybersecurity, cloud, business analytics and IoT technologies.
Polk revealed he had talked to “a very good cross-section” of customers and vendors about the merger, adding the feedback had been “overwhelmingly positive across the board”.
Commenting on Apollo Global Management’s commitment to the combined business, Hume said it viewed the engagement with IT distribution “as a journey. This is just part of the journey.” The big message was that Apollo viewed distribution “as a great investment opportunity”.
The plan is to achieve “synergy benefits” of $200 million by the end of the second year after the deal has closed. Polk identified Synnex’s internal ERP system as a key area for driving many of the savings going forward. He also highlighted consolidation of facilities and savings in corporate spend.