Tech Data Corp., a major distributor of I.T. products and services that does much of its sales through ecommerce, is about to be acquired for approximately $6 billion.
The company, No. 6 in the 2019 B2B Distributor 300 ranking published by Digital Commerce 360 B2B, rejected a reported counter-offer last week for about $5 billion from Warren Buffett’s private equity firm Berkshire Hathaway. But that led Tech Data’s suitor, Tiger Midco LLC, an affiliate of investment funds managed by investment firm Apollo Global Management, to raise its initial offer of $130 per share to $140, resulting in the current $6 billion offer.
Tech Data’s board has unanimously approved the latest offer, which is pending final approval by Tech Data’s shareholders. The company is free to continue considering other offers that may arise during a “go-shop” period that ends on Dec. 9, Tech Data says.
Richard Hume, Tech Data’s CEO, says his company’s pending acquisition by the funds affiliated with Apollo will bring the IT distributor resources it will use to grow with “unparalleled” capabilities. “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,” Hume said last month. “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.”
Banking on public-sector sales
One of the areas where Tech Data expects to increase its market share is in providing such technology as cloud computing, data management, web analytics and cybersecurity to government agencies and other public sector clients through its acquisition of DLT Solutions. DLT provides these and other technology products and related services to educational institutions, public utilities and healthcare organizations, and federal, state and local government agencies. Tech Data didn’t say what it is paying for DLT, which Washington Technology ranks as 63rd among public-sector technology providers.
Meantime, Tech Data reported last week that its net sales dipped 2% year over year to $9.12 billion for the third quarter ended Oct. 31. The company doesn’t break out ecommerce sales figures, but says it does about half of its sales electronically through ecommerce and EDI, and that it has annualized “cloud billings” valued at $1.5 billion.
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