Saturday, February 24, 2018
Business

Trigaux: Tech Data makes bold acquisition move while other Tampa Bay firms opt to sell out

After watching too many major Tampa Bay corporations sell out to other businesses in recent years, it's a pleasure to see a few of the bigger companies still here pursue serious acquisitions of their own.

Case in point: Tech Data Corp. The IT products distributor this week said it will pay $2.6 billion to buy Technology Solutions, a unit of Phoenix-based Avnet. The deal, Tech Data's largest, will boost the Clearwater company's annual revenues to $35 billion from $26 billion, bump its employees to more than 14,000 from 9,000 and push the business into 35 countries (including into Asia for the first time) from today's 21 countries.

"We want to be nimble," Tech Data CEO Bob Dutkowsky says.

Initial reviews are thumbs up. Shares of Tech Data — this metro area's largest public company by revenues — soared a whopping 22 percent on Monday. It rose slightly on Tuesday, closing at $85.08 — an all-time high. Multiple firms, from BankofAmerica/Merrill Lynch to Stifel, raised their ratings this week from neutral to buy.

The company is "all of a sudden a worldwide powerhouse in information technology," CNBC stock commentator Jim Cramer gushed on Monday. "I'm kind of amazed. What a deal."

I'm kind of amazed, too.

Previous coverage: Clearwater's Tech Data to buy technology firm for $2.6 billion

Too few Tampa Bay corporations seem to have the gumption or muscle to pursue big deals. Most seem more adept at selling out to other, distant firms. Consider:

•Tampa's TECO Energy, parent of Tampa Electric and Peoples Gas? Sold off this year to Canada's Emera Inc.

•C1 Bank, St. Petersburg's innovative community bank? Sold to Bank of the Ozarks this summer.

•Lincare, Clearwater's giant distributor of healthcare oxygen? Bought by Linde AG of Germany.

•Danka Business Systems? Global Imaging Systems? Florida Progress? All notable area companies of the past that were absorbed by others.

So let's applaud Tech Data's leadership for its self confidence and belief it can remain a major competitor as it spans a larger piece of the globe. Especially in Asia, where Tech Data's long wanted to enter.

Dutkowsky, who once worked for IBM in Japan, once told me Tech Data "looks at Asia all the time." He said that in 2012. Now he's getting his wish. Still, the Avnet deal will yield only a tiny Asian foothold for starters. It will represent 3 percent of Tech Data's overall business.

No deal of such magnitude is without risk. Tech Data is spending $300 million of cash and taking on $2.1 billion of new debt to buy the Avnet unit.

Industry experts point to the rapid consolidation now under way in Tech Data's industry. They cite the deal made earlier his year by Ingram Micro, Tech Data's chief competitor, to be acquired by China's HNA Group for $6 billion.

Tech Data's expansion by acquisition puts the IT company in the same camp as St. Petersburg's Raymond James Financial. The investment firm dared to buy a Memphis-based brokerage called Morgan Keegan in 2012 for $930 million. Since then Raymond James has grown even more, adding financial advisors from Wall Street firms — especially in wealthy corridors in the Northeast and California.

That growth strategy has rewarded Raymond James with a market value topping $8 billion, a huge increase from its days before the Morgan Keegan deal.

Tech Data's market value, about $3 billion, has changed little in years. With Monday's deal, my bet is that value will begin to rise.

Taking a smart risk can have its rewards. That's how the game is played. Nice to see a bit more of it in action in this metro market.

Contact Robert Trigaux at [email protected] Follow @venturetampabay.

Comments
Activists call for tech companies to drop NRA’s digital TV channel

Activists call for tech companies to drop NRA’s digital TV channel

Activists are calling for Apple, Amazon, Google and other streaming companies to drop the National Rifle Association’s digital TV channel in the wake of the mass shooting at a Florida school last week, putting the companies in the delicate position o...
Published: 02/24/18
Edward Peachey demands severance from CareerSource before stepping down

Edward Peachey demands severance from CareerSource before stepping down

The head of the Pinellas and Hillsborough career centers under multiple investigations into the way they report job placement figures says he has no intention of stepping down.That’s unless he is paid five months severance.In a letter from his attorn...
Published: 02/23/18
Terminally ill Valrico man dies a month after marrying junior high sweetheart

Terminally ill Valrico man dies a month after marrying junior high sweetheart

VALRICO — During his final few days, 19-year-old Dustin Snyder moved to a hospice house, surrounded himself with belongings from home, swam in a pool and visited the beach in Ruskin.Wherever he went, the terminally ill Valrico man had family beside h...
Published: 02/23/18
Tampa Downtown Partnership gets initial city okay to expand north

Tampa Downtown Partnership gets initial city okay to expand north

TAMPA — The Downtowner may be heading to Tampa Heights — but not until Oct. 1.That’s because the nonprofit Tampa Downtown Partnership this week won initial City Council approval to expand into Tampa Heights."Tampa Heights is becoming an important gat...
Published: 02/23/18

Tampa lawyer gets 27 months in federal prison for insider trading

Tampa lawyer Walter "Chet’’ Little was sentenced this week to 27 months in federal prison for engaging in an insider trading scheme that reaped him and a friend profits totaling nearly $1 million.According to federal authorities, Little accessed comp...
Published: 02/23/18
More companies are cutting ties with gun lobby as #BoycottNRA movement gains steam

More companies are cutting ties with gun lobby as #BoycottNRA movement gains steam

Three major companies — Enterprise Holdings, First National Bank of Omaha, and the cybersecurity giant Symantec — have ended co-branding partnerships with the National Rifle Association as a #BoycottNRA social media movement picks up steam.Enterprise...
Published: 02/23/18
Citi to refund $330 Million to credit card customers it overcharged

Citi to refund $330 Million to credit card customers it overcharged

Citigroup is preparing to issue $330 million in refunds after the bank discovered it had overcharged nearly 2 million credit card customers on their annual interest rates, a spokeswoman said Friday.The bank, which has about 150 million credit card ac...
Published: 02/23/18
Girl Scouts camp sold to member of Tampa’s Lykes family

Girl Scouts camp sold to member of Tampa’s Lykes family

ODESSA — The 63-year-old lakeside summer camp had no air conditioning or electricity. Cabin floors were often covered in grime, and cobwebs clung to the windows.But under new ownership, the 18.6 acres of Florida woods known as Camp Scoutcrest to memb...
Published: 02/23/18
BB&T cites ‘technical issue’ in outage affecting customers

BB&T cites ‘technical issue’ in outage affecting customers

Millions of BB&T customers were unable to access their accounts after a service outage which the bank blames on an equipment malfunction. The Winston-Salem, North Carolina-based bank posted a statement on its Twitter page saying the problem persiste...
Published: 02/23/18
Realtors are ‘every 10 feet’ in Florida but more want in the business

Realtors are ‘every 10 feet’ in Florida but more want in the business

ST. PETERSBURG — Tired of working as a yacht captain, Pancho Jiminez decided to get into real estate even though he knows it’s a highly competitive field in Florida."Realtors are every 10 feet around here," he says.Nonetheless, Jiminez is among 30 st...
Published: 02/23/18