Distribution giant Tech Data has agreed to be acquired by private equity investor Apollo Global Management.
Under terms of the deal, which must be approved by shareholders, Apollo will buy all of Tech Data’s common stock at $130 a share, resulting in a valuation for the company of approximately $5.4 billion.
Rich Hume, Tech Data’s CEO, will remain in that position following the purchase, and the company will continue to be headquartered in Clearwater, Florida.
“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 in a media statement.
“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.”
Tech Data’s board of directors has unanimously approved the deal and advises the company’s stockholders to accept Apollo’s offer.
“This agreement follows a process of consideration of Apollo’s proposal by the Board that included review and discussion of strategic alternatives with the Board’s financial and legal advisors,” said Charles E. Adair, lead independent director of the Tech Data Board of Directors, in prepared remarks. “The transaction delivers significant cash value to our shareholders and creates exciting opportunities for our colleagues, channel partners and other key constituents.”
Tech Data’s acquisition comes as the company nears the end of a multi-year strategic realignment aimed at transforming itself from a traditional distributor of IT products to a “solutions aggregator” that combines hardware and software with services to help partners bring complete solutions to market. The company purchased Avnet’s technology solutions business for $2.6 billion in 2017 in connection with that initiative.
“Through this investment, we are committed to expanding Tech Data’s position as a trusted partner to the world’s leading technology vendors while providing best-in-class customer service,” said Matt Nord, co-lead partner of Apollo Private Equity, in a press statement. “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.”
Conditions attached to the Apollo deal allow Tech Data to “actively solicit alternative acquisition proposals from third parties during a ‘go-shop’ period from the date of the agreement until Dec. 9, 2019,” according to a Tech Data press release.
“We have tremendous respect for Tech Data’s talented management and colleagues around the globe and commend their success in establishing Tech Data as a leader at the center of the IT ecosystem,” said Robert Kalsow-Ramos of Apollo Private Equity. “We are excited to work with the Tech Data team and continuing to invest in the company’s people and end-to-end portfolio.”