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Apollo increases Tech Data offer to fend off rival bid
Private equity player is now prepared to pay $6bn for distributor after its original offer was trumped by a rival suitor
Apollo Global Management is clearly keen to ensure it brings its acquisition of Tech Data home with the firm increasing its offer for the distributor.
The firm has now increased its offer from $130 a share to $145, taking the price of the deal up from $5.4bn to $6bn. The move was made in response to a counter offer being made earlier this week for the distributor, which has now been topped by Apollo.
"Pursuant to the “go-shop” provisions of the Original Agreement, on November 23, 2019, Tech Data received a “Company Takeover Offer” from another bidder. On November 24, 2019, the Tech Data Board of Directors unanimously determined, in consultation with its legal and financial advisors, that the Competing Offer constituted a “Company Superior Proposal” as defined in the Original Agreement and notified Parent of its determination. In response, on November 27, 2019, Parent submitted a revised proposal with the terms set forth in the Amendment," the firm stated.
The Tech Data board has unanimously approved the amended offer and is encouraging shareholders to give it their backing. But the company remains open to other offers until 9 December during the "go-shop" period.
The timing of the improved offer comes just a day after Tech Data issued what could be its last set of public results before it moves into private hands with the third quarter producing a mixed bag for the distributor.
For the three months ended 31 October the firm saw worldwide net sales decrease by 2% to $9.1bn and net income fell by 21% to come in at $90.8m. Europe came in with revenues in the region down by 6% to $4.6bn, although operating income improved by 67%.
The firm has been following a four-pronged approach: investing in next generation technologies, strengthening the end to end portfolio, transforming its business digitally and optimising its global footprint.
“We delivered solid third quarter results while continuing to execute on our strategy and portfolio optimization actions,” said Rich Hume, CEO of Tech Data.
Because of the Apollo deal the distributor swerved going through a webcast or providing any future guidance with Hume sticking to talking about its own recent acquisition.
“In Q3, we also announced our intention to acquire DLT Solutions, a premier software and cloud solutions aggregator focused on the U.S. public sector. This acquisition reflects our strategy of delivering higher value – strengthening our end-to-end portfolio and accelerating our capabilities in next-generation technologies," he said.
