Synnex Corp. has agreed to buy Tech Data Corp. in a $7.2 billion combination of information technology hardware and service companies.
The news sent Synnex stock (NYSE:SNX) up more than 10% to an all-time high in trading before the markets opened on Monday, according to the Silicon Valley Business Journal.
Synnex and Tech Data distribute, integrate and service technology made by other companies. The companies said that after the merger they will operate in more than 100 countries, offering more than 200,000 product and solutions to 150,000 customers from more than 1,500 vendors, the report says.
Synnex is buying Tech Data from New York private equity firm Apollo Global Management Inc., which bought the Clearwater, Fla.-based company for about $6 billion last year. When the deal is done in the second half of this year, Synnex will own 55% of the combined company and Apollo will own 45%.
Apollo is getting 44 million shares of Synnex stock along with a refinancing of Tech Data’s net debt and $2.7 billion of redeemable shares.
Why Synnex Acquired Tech Data
Tech Data CEO Rich Hume will be CEO of the combined company. Synnex CEO Dennis Polk will be executive chair of the board, which includes being actively involved in the strategy and integration of the businesses.
Polk will lead an 11-member board, including Hume, with six individuals appointed by Synnex and Apollo designating four, two of whom will be independent directors.
“This transaction allows for accelerated revenue and earnings growth, an expanded global footprint, and the ability to drive significant operating improvements while continuing to create shareholder value,” Polk said in the joint announcement.
The companies said that they expect an accretion of non-GAAP earnings per share of about 25% in the first year after the deal closes. They project they will see net optimization and synergy benefits of about $100 million in that first year and at least $200 million in the second year.
Synnex also posted first quarter results that beat analyst expectations on Monday, showing net income of $87.8 million on $4.94 billion in revenue in the period. Its adjusted earnings per share was $1.89.
Analysts were expecting adjusted earnings of $1.70 a share on $4.71 billion in revenue.