Tech Data weeks away from closing Apollo deal

Tech Data has already shared its last set of full-year numbers before it enters into fresh ownership and has issued what are likely to be its last set of quarterly numbers before the Apollo deal goes through.

The distributor’s numbers for the first quarter ended 30 April were delivered against a background of the coronavirus pandemic and it was impossible for CEO Rich Hume not to mention the impact of the crisis in his comments accompanying the results.

Overall net sales fell by 3% year on year to $8.18bn, with GAAP net income falling by 13% to $48.1m from $55.4m. Gross profit was $531.7m, an increase of 4% compared to the prior-year quarter.

Across Europe, which accounts for 49% of Tech Data’s worldwide sales, revenue fell by 8%, coming in at $3.9bn compared to $4.3bn last year. The distributor pointed out that “portfolio optimisation actions” in the region had reduced net sales by about 3%.

Tech Data CEO Hume has been following a strategy of looking for higher value since he took the helm in June 2018.

Sales in the Americas improved year on year by 4% to come in just shy of $4bn, but the story was bleaker in the Asia-Pacific region, with revenues dropping by 16% in the first quarter.

“With the onset of the global Covid-19 crisis, the first quarter brought challenges to businesses across geographies and sectors, including the IT ecosystem,” said Hume. “With this backdrop, Tech Data once again is proving its role as the vital link in the IT supply chain, delivering the critical technologies and solutions needed to address rapidly evolving business needs, including enabling remote work.

“Throughout Q1, we experienced strong demand for endpoint solutions driven by remote work and business continuity needs. I’d like to acknowledge the dedication and commitment of our worldwide colleagues who continue to support our channel partners and each other with excellence in these unprecedented times.”

Hume added: “The quarter also brought with it another milestone toward completing our acquisition by Apollo when we received shareholder approval of the transaction, which we look forward to closing upon completion of customary closing conditions.”

Tech Data entered into an agreement to be acquired by Apollo Global management last November and has been working through the process of getting shareholder approval and the green light from regulators.

Back in February, the distributor’s shareholders held a special meeting and approved the plans.

The Q1 results included an update that revealed that Tech Data had received all regulatory approvals necessary to complete the merger, except for the approval of the Australian Foreign Investment Review Board.

The plan is still to close the deal in the first half of this calendar year, if that Australian approval comes through in time, so in just a matter of weeks. Because of the closeness of the merger closing, the firm provided no forward-looking guidance.