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No more rival bids for Tech Data, so $6 billion sale is on

Prospective bidders had until 11:59 p.m. Monday to submit competing offers for Tech Data during what is known as a “go-shop” period.
Prospective rivals to Apollo Global Management had until 11:59 p.m. Monday to submit a competing bid for Tech Data during what is known as a "go-shop" period. [DIRK SHADD  |  Tampa Bay Times]
Prospective rivals to Apollo Global Management had until 11:59 p.m. Monday to submit a competing bid for Tech Data during what is known as a "go-shop" period. [DIRK SHADD | Tampa Bay Times]
Published Dec. 10, 2019
Updated Dec. 10, 2019

LARGO — Monday’s midnight deadline for competing offers for Tech Data came and went with no word of any new bidders, clearing the way for the Largo-based technology distributor to be sold to Apollo Global Management for $6 billion.

Tech Data didn’t say whether it received any competitive offers apart from the one — from no less than famed Omaha billionaire Warren Buffett — that prompted Apollo to raise its original offer just before Thanksgiving. Nor did it say whether it got any offers that just did not measure up to Apollo’s.

Either way, the result is the same: The sale to Apollo is expected to close in the first half of next year, subject to regulatory approvals and a vote of Tech Data’s stockholders.

The news was the latest in a high-stakes series of events that became public in mid-October with the first report of Apollo’s $5 billion offer for Tech Data, which is No. 88 on the Fortune 500 list of publicly traded U.S. companies.

Apollo is a private equity firm based in New York with $325 billion in assets. It has invested in a wide range of well-known companies, including Chuck E. Cheese, Norwegian Cruise Lines and ADT home security.

RELATED: Apollo Global Management bets on companies to create wealth for pension funds, financial institutions and high net worth individual investors

In mid-November, Tech Data announced it had accepted Apollo’s $5.4 billion offer, which was based on offering Tech Data stockholders $130 for each share of Tech Data stock they held.

Apollo proposes to take Tech Data private, meaning its stock would no longer be publicly traded. Tech Data would operate as a standalone subsidiary, keeping its name, its Pinellas County headquarters and its executive team, led by chief executive officer Rich Hume. Hume said he expected the sale to Apollo to position “us for continued growth and success.”

Tech Data chief executive officer Rich Hume talks to company employees about the pending acquisition of Tech Data for $5.4 billion at a global company-wide meeting on Nov. 13. Apollo is known for having a patient, value-oriented approach expected to help Tech Data invest in strategies that pay off over time. “They are very willing to put those resources to work with those who present good business plans,” Hume said at the meeting. [David Kiester | Tech Data]

The day before Thanksgiving, Tech Data announced that Apollo had raised its offer to $6 billion, or $145 per share, in response to a rival bid of $140 per share from Buffett’s Berkshire Hathaway investment company. Outbid, Buffett told CNBC he would not raise his offer.

RELATED: Warren Buffett reportedly made rival bid for Tech Data

The door for offers from Buffett and anyone else was open until 11:59 p.m. Monday under what is known as a “go-shop” period where Tech Data could entertain competing offers from any other party. During the go-shop period, BofA Securities, which is Tech Data’s financial advisor, solicited offers from other prospective buyers. Buffett told the Wall Street Journal he read Tech Data’s financial statements after BofA approached one of Berkshire’s portfolio managers, and he liked what he saw.

“It was our kind of business. It’s one you can understand,” Buffett told the Journal. “I may not understand all of the products that they sell and I may not understand what the customers who buy the products do with them, but I do understand the middleman’s role.”

Edward Raymund founded Tech Data in 1974 to sell computer tapes, disk packs and other supplies for mini and mainframe computers directly to users.

Today the company buys tech products from Apple, Cisco Systems, HP and others, then sells the equipment and provides service to clients in 100 countries. Europe accounts for 51 percent of Tech Data’s sales, with another 46 percent coming from North and South America.

Over the past 45 years, it has grown into a company with 125,000 customers around the world, $32.7 billion in annual revenue and 14,000 employees, 2,000 who work in Pinellas County.

Tech Data stock was trading Tuesday at $143.54 per share, down slightly from its close on Monday.

Now that the go-shop period is over, Tech Data would have to pay Apollo $184 million if it terminates the agreement, according to the terms of the merger.

If Apollo fails to consummate the deal, then it has agreed to pay Tech Data a termination fee of nearly $316 million.

Times senior news researcher Caryn Baird contributed to this report.

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