Private equity firm to buy world’s second-largest distributor for $5.4 billion
Tech Data is coming off the publicly traded markets through an acquisition by Apollo Global Management.
The Lowdown: Through the deal, Tech Data shareholders will receive about $130 per share. The acquisition is subject to regulatory approval and isn’t expected to close until early 2020.
The Details: Tech Data and Apollo are giving no indication of what happens next. Tech Data CEO Rich Hume says the acquisition will give the distributor the means to build upon its existing platform of product reselling, logistics, and cloud services.
The Impact: The short-term impact on the distribution segment is likely nil, given that any changes in operations or focus will take time to implement. In the long term, the acquisition could indicate a resumption of consolidation that started in the distribution segment a few years ago.
Background: In mid-October, reports surfaced that Apollo Global Management approached Tech Data in an unsolicited acquisition bid. Until now, Tech Data gave no indication it was interested in the deal or that it sought acquisition offers.
Tech Data signaled to the market that it was business as usual in late October when it acquired government distributor and integrator DLT Solutions for an undisclosed amount.
The Buzz: “Over our 45-year history, Tech Data has grown to become one of the largest and most respected technology distributors in the world. This agreement reflects the significant progress we’ve made in our strategy of delivering higher value and positions us for continued growth and success,” said Hume. “This investment by funds managed by one of the world’s leading global alternative investment managers will afford us additional resources to accelerate our ability to bring to market the technology products and solutions the world needs to connect, grow, and advance. The transaction will enable us to build on our success, making Tech Data a growth platform and enabling us to further differentiate and expand our end-to-end solutions and provide our channel partners with unparalleled reach, efficiency and expertise.”
“This agreement follows a process of consideration of Apollo’s proposal by the board that included review and discussion of strategic alternatives with the board’s financial and legal advisors,” said Charles E. (“Eddie”) Adair, lead independent director of the Tech Data board of directors. “The transaction delivers significant cash value to our shareholders and creates exciting opportunities for our colleagues, channel partners, and other key constituents.”
“Through this investment, we’re committed to expanding Tech Data’s position as a trusted partner to the world’s leading technology vendors while providing best-in-class customer service,” said Matt Nord, co-lead partner of Apollo Private Equity. “As a private company with our sponsorship and a strong balance sheet, Tech Data will have significant financial and strategic flexibility to drive growth going forward.”
“We have tremendous respect for Tech Data’s talented management and colleagues around the globe and commend their success in establishing Tech Data as a leader at the center of the IT ecosystem,” said Robert Kalsow-Ramos of Apollo Private Equity. “We are excited to work with the Tech Data team and continuing to invest in the company’s people and end-to-end portfolio.”