Less than a year after going private, Tech Data is preparing for a merger.
The Largo technology distribution company on Monday announced an agreement to merge with Fremont, Calif.’s Synnex Corp. in a deal estimated to be worth $7.2 billion.
The agreement comes months after Tech Data completed its $6 billion sale to New York private equity firm Apollo Global Management. When the deal is finalized later this year, Synnex shareholders will own 55 percent of the company, Apollo 45 percent — effectively bringing what was once one of Tampa Bay’s largest public companies back to Wall Street.
“We’ve had conversations over the past few months,” Synnex CEO Dennis Polk said in a conference call with investors Monday morning. “We’re both always evaluating opportunities for growth in our businesses and enhancing the way we deliver value to our customers and vendors and colleagues and investors. Through the conversations that we’ve had, we realized the combination of these two companies could really deliver a lot of value.”
Tech Data CEO Rich Hume called the deal “transformational,” saying the combined company would be in a stronger position to invest resources in next-generation cloud, data and cybersecurity technologies.
“They were a meaningful competitor both when we were public and private,” Hume said in an interview Monday. “It’s a privilege to be able to bring both of these companies together.”
Hume said Apollo wasn’t actively shopping Tech Data at the time of the sale last summer.
“We started to think about the changes in technology, the changes in the overall market, and how we best serve our customers, and how our vendors want to work and operate as we move into the future,” he said. “It’s just one of those opportunities that wasn’t planned, and happened.”
Founded in 1974, Tech Data was once a Fortune 100 company with more than 2,000 local employees. Merging with Synnex, itself a Fortune 200 company, could help Tampa Bay regain a spot on Fortune’s list.
“If they combine companies, that’ll be our largest company, probably — at least rivaling Raymond James,” said Mike Meidel, director of Pinellas County Economic Development. “So that gives us bragging rights. Obviously, we love having that kind of cache associated with Pinellas County.”
That’s only if the company remains based in Tampa Bay. The companies haven’t settled on unified branding or where they’ll keep a combined headquarters.
While based in northern California, Synnex has a large presence in Greenville, S.C. Hume said he expects the company will maintain flagship locations both there and in Largo. At the very least, he plans to maintain his residence here, “with probably a more robust travel schedule.”
“Under all circumstances, we’ll have a meaningful business in Florida, probably similar in size and scale as it is today,” he said.
Meidel said local economic leaders would jump at the chance to persuade the company to stay in Largo, potentially offering incentives such as property tax breaks or Penny For Pinellas funding, he said.
“It’s going to be a tremendous company,” Meidel said. “You’ve already seen it in the stock price. The world sees that this is a great opportunity to strengthen both companies. But we just want to make sure they choose Pinellas County and try to grow here.”
Combined, the companies will have 22,000 employees and associates, offering more than 200,000 products and services to 150,000 customers and 1,500 vendors in more than 100 countries.
Synnex reported revenues of $4.9 billion from December to February, as well as $141.7 million in operating income. Last April, in its final publicly reported quarter before the Apollo deal, Tech Data reported revenues of $8.1 billion and net income of $48 million.
An announcement touting the merger touted the fact that the companies foresaw $100 million in potential synergistic savings in the first year and $200 million by the end of the second. Whether that translates into job losses on either side remains to be seen. Hume said he expected “a moderate level of potential duplication that we’ll have to work out,” but nothing that would significantly change the size of the workforce at either flagship campus.
“The Tampa Bay area should absolutely count on Tech Data continuing to be a strong corporate citizen going forward,” he said. “From my point of view, nothing changes in that light.”
Hume will remain the company’s CEO and serve on its 11-member board, which will initially include four designees from Apollo. Polk will serve as executive chairman of the company’s board of directors.
Synnex shares jumped more than 6 percent Monday, settling around $110 by late afternoon.