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Tech Data gets $5 billion bid from Apollo Global, Reuters reports

The Largo company’s stock price soared Wednesday following the report, which the news service based on information from “people familiar with the matter.”
Tech Data's headquarters in Clearwater. The company is one of the largest in the Tampa Bay area.
Tech Data's headquarters in Clearwater. The company is one of the largest in the Tampa Bay area. [ TD AGENCY | Courtesy of Tech Data ]
Published Oct. 16, 2019
Updated Oct. 16, 2019

LARGO — Wednesday was a good day to own Tech Data stock, thanks to a report that a giant private equity firm has offered to buy the Largo-based company for $5 billion.

Shares of Tech Data jumped nearly 12 percent after Reuters reported Tuesday night that Apollo Global Management was interested in an acquisition.

Reuters cited “people familiar with the matter” as its source. Headquartered in New York, Apollo Global has more than $312 billion in assets under management.

Apollo offered to pay about $130 per share in cash for Tech Data, according to Reuters. That news was like rocket fuel for investors.

By mid-day Wednesday, Tech Data’s stock price topped $128 per share, its all-time high. By the market’s close, it had settled to $124.47, up from $111.34 the day before.

RELATED: Tech Data off to a ‘solid start’ but watching tariff and trade issues

Meanwhile, the total market value of the company’s stock rose from a little more than $4 billion Tuesday to about $4.4 billion Wednesday.

Heady stuff, but Reuters also reported that there was no guarantee that Tech Data would even negotiate with Apollo Global. A stock analyst who covers Tech Data had his doubts.

“My gut tells me that Tech Data has no interest in selling at this price,” said Keith Housum at Northcoast Research in Cleveland, Ohio. “It’s just not enough.”

Generally, Housum said, private equity firms are not interested in acquiring technology distribution companies like Tech Data. So something else might be going on.

One possibility is that Apollo Global sees Tech Data as being undervalued, Housum said. Maybe it thinks it can pick up the company, then cut costs, research and development or investments — “whatever they could do to spruce up earnings,” he said — and put it back on the market.

Another scenario is related to a similar report from Reuters in December that Apollo Global was interested in acquiring an electronics distribution firm called Ingram Micro from its Chinese owner, HNA Group. Apollo Global might not have the money to do both acquisitions, Housum said, so signalling an interest in Tech Data could be a way to get HNA to move on Ingram Micro.

Whatever’s going on, neither Tech Data nor Apollo Global were talking Wednesday.

“In keeping with company policy, Tech Data does not provide comment on market rumors or speculation,” Tech Data spokesman Bobby Eagle said in an email to the Tampa Bay Times. A spokesman for Apollo Global likewise declined to comment.

Tech Data is No. 88 on the Fortune 500 list of largest publicly traded companies and has more than 14,000 employees worldwide, 2,000 of them at its headquarters near St. Petersburg-Clearwater International Airport.

The company buys a wide range of servers, computers, printers, phones, cameras, tablets, copiers, scanners, software, cloud services and more from manufacturers like Apple, Cisco Systems and HP. It sells those products and provides service and support to clients in more than 100 countries through a network of 11 logistics centers, six of them in the United States.

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Last year, Tech Data had $37.2 billion in annual revenues, which made it Florida’s second largest publicly traded company by revenue, behind only World Fuel Services of Miami.

Contact Richard Danielson at Follow @Danielson_Times

Tech Data a glance

Headquarters: Largo

The business: Buys tech products from Apple, Cisco Systems HP and others, then sells and provides service to clients in 100 countries.

Revenues last year: $32.7 billion, second largest among public companies in Florida

Employees: 14,000-plus worldwide, 2,000 in Clearwater

Fortune 500 rank: 88th

Reported purchase offer: $5 billion from Apollo Global Management