Move comes as distributor goes private with the close of $6 billion Apollo acquisition
With the $6 billion acquisition by Apollo Global Management, Tech Data is preparing to spend $750 million over the next five years to drive improvements in such areas as automation, analytics, and the cloud.
The Lowdown: The global distributor this week announced the closing of the acquisition, completing a deal that was announced in November 2019 and making Tech Data a private company.
The Details: The $750 investment will focus on making Tech Data a much more modern, digital company, with the goal of creating a more agile and responsive company that can innovate more quickly and improve experiences for its channel partners, according to officials.
Among the plans are building a highly scalable digital business platform and a cloud-based digital marketplace, both of which will support Tech Data’s aggressive growth plans. They also will address growing demands for emerging technology and more modern consumption models.
The Impact: While awaiting the completion of the Apollo deal, Tech Data continued to expand its capabilities. In May, the company joined the North American Smart Cities Council. A month earlier, Tech Data announced an expansion of its Cloud Solution Factory with the addition of Modern Workplace with Microsoft Secure Score, which uses automated policy enforcement to create a security baseline for Office 365 users.
At the same time, Tech Data also launched Tech Data Coaches, an online coaching and collaboration platform aimed at helping resellers grow their networks, develop competencies, and connect with other companies.
Background: Tech Data in late May announced that in the first quarter, net sales fell 3% year-over-year to more than $8.1 billion and net income dropped 13% to $48.1 million. Tech Data officials said the distributor was challenged by the global coronavirus pandemic, though the rapid shift to remote work by most companies and business continuity needs drove strong demand for endpoint solutions.
The Buzz: “Tech Data’s acquisition by the Apollo funds is a significant milestone, and their support of our multi-year commitment of resources underscores our collective focus on long-term value creation,” Tech Data CEO Rich Hume said. “We continue to execute on our strategy to transform our company into one that defines a new standard of operational and cultural excellence in our industry. We believe Apollo will be an invaluable partner in helping us better enable our channel partners to bring to market the technology products and solutions the world needs to connect, grow, and advance.”
“Apollo sees Tech Data as a strong platform for meaningful growth and further diversification, and we are committed to supporting investments that build on this vision,” said Robert Kalsow-Ramos, private equity partner at Apollo. “This investment over the next five years helps ensure the company has the resources necessary to launch a bold digital enablement and innovation program that will transform the way it serves channel partners and employees.”