Tech Data accepts $5.4bn private equity offer

Consolidaton in the channel is not just limited to a reseller level with Tech Data, one of the lagrest global players in the distribution space, deciding to accept an offer from an investment fund.

An affiliate of funds managed by Apollo Global Management have moved to pick up the distributor in a deal valuing the firm at $5.4bn.

The Tech Data Board has unanimously approved the transaction and recommended that shareholders give it the thumbs up and if all goes to plan it should close in the first half of next year.

Tech Data does have the option to talk to any other suitors in a "go-shop" period that will run until 9 December. But any other offer would have to match the Apollo deal, which is valuing the distributor at a 24.5% premium on the firm's last share price before the speculation about a deal broke.

After the deal closes the current Tech Data CEO Rich Hume will remain in post and lead the firm from its Florida-based headquarters. The main change will be the shift to becoming a private company and no longer being publicly listed.

“Over our 45-year history, Tech Data has grown to become one of the largest and most respected technology distributors in the world. This agreement reflects the significant progress we have made in our strategy of delivering higher value and positions us for continued growth and success,” said Hume.

“This investment by funds managed by one of the world’s leading global alternative investment managers will afford us additional resources to accelerate our ability to bring to market the technology products and solutions the world needs to connect, grow and advance. The transaction will enable us to build on our success, making Tech Data a growth platform and enabling us to further differentiate and expand our end-to-end solutions and provide our channel partners with unparalleled reach, efficiency and expertise," he added.

Matt Nord, Co-lead Partner of Apollo Private Equity, said that it had plans to build on the heritage that Tech Data had already worked hard to establish with vendors and resellers.

“As a private company with our sponsorship and a strong balance sheet, Tech Data will have significant financial and strategic flexibility to drive growth going forward," he said.

Tech Data will still release its third quarter fiscal year 2020 results on 26 November but will not be holding a conference call and talking around those numbers given the sale announcement.