Expiration of “go shop” period clears way for Apollo Management’s $6 billion acquisition
Apollo Global Management’s proposed $6 billion acquisition of Tech Data cleared a hurdle this week when no other competitive bids for the global distributor were received.
The Lowdown: The “go shop” period allowed under the deal – which enabled Tech Data and its representatives to solicit alternative bids from third parties – expired at 11:59 p.m. on Dec. 9 with no other competitive bids made, according to Tech Data officials.
The Details: The expiration clears the way for Apollo Management to move forward with its plan to buy Tech Data, a 45-year-old distributor that comes with more than 125,000 IT reseller customers in more than 100 countries, more than 14,000 employees, and $37.2 billion in sales for its fiscal-year 2019.
Apollo Management, with $312 billion of assets under management – including Charter Communications and managed cloud company Rackspace – in November announced it was offering $5.4 billion for Tech Data. However, Berkshire Hathaway – the multinational holding company run by high-profile investor Warren Buffet – came in with a bid of around $6 billion just before the Thanksgiving holiday, a move that forced Apollo to raise its bid to $6 billion.
The Impact: With the potential for competitive bidders out of the way, Apollo’s acquisition of Tech Data is expected to close in the first half of 2020 after various regulatory approvals are granted. Tech Data has a valuation of $5.4 billion, with debt of about $1.5 billion.
Background: The announcement of Apollo’s bid for Tech Data was a surprise to many in the IT and channel worlds but is part of a larger years-long consolidation trend in the IT distribution market. Soon after rumors about Apollo’s interest in Tech Data began emerging, the giant distributor bought DLT Solutions for an undisclosed amount to bolster its presence in the public sector.
The Buzz: “During the ‘go-shop’ period, representatives of BofA Securities, Inc. (“BofA Securities”), financial advisor to the company, undertook a broad solicitation effort to contact parties that the company and BofA Securities believed might be interested in a possible alternative transaction,” Tech Data officials said in a statement. “Upon expiration of the go-shop period, pursuant to the Merger Agreement, Tech Data became subject to customary ‘no-shop’ provisions that limit its and its representatives’ ability to solicit alternative acquisition proposals from third parties or to provide confidential information to third parties, subject to customary ‘fiduciary out’ provisions.”