Tech Data Goes Private in Sale to Equity Firm

The future of distribution continues to morph as exemplified by Wednesday’s announcement of the pending acquisition of 45-year old Tech Data by private equity firm Apollo Global Management in a deal estimated at $5.4 billion. A publicly traded company, the distributor will become private after the transaction closes.

The news comes on the heels of recent Tech Data acquisition rumors and the signing of an agreement by Tech Data to acquire DLT Solutions, a 30-year old company that provides IT solutions for the U.S. public sector.

Tech Data’s Richard Hume

“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 Rich Hume, CEO at Tech Data. “This investment of 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. This 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.”

Hume will retain his leadership position at Tech Data, which he’s had since 2018.

The Clearwater, Florida, distributor reported $37.2 billion in sales in fiscal 2019 and is ranked number 88 on the Fortune 500. Tech Data has made numerous global acquisitions since its founding, one of the more recent and notable being Avnet’s Technology Solutions business for $2.6 billion, in 2017. The acquisition expanded Tech Data’s capabilities in next-gen technologies and also established a presence in Asia Pacific.

That deal was a sign of the times, as Tianjin Tianhai, a Chinese shipping group, bought Ingram Micro earlier in the year, ScanSource acquired master-agent Intelisys and Synnex completed the acquisition of Westcon-Comstor Americas business in 2017.

Tech Data has approximately 100 vendors on its advanced solutions line card for U.S. and Canada, including Cisco, Dell EMC, HPE, Hitachi Vantara, IBM, Lenovo, Oracle, and VMware to name a handful. There are even more vendors on the distributor’s endpoint solutions line card.

We have tremendous respect for Tech Data’s talented management of 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 Global Management. “We are excited to work with the Tech Data team and continuing to invest in the company’s people and end-to-end portfolio.”

The deal is expected to close in the first half of next year.

“[The Tech Data deal] is not surprising, as many of the classic or ‘traditional’ distributors are struggling to provide significant value to their customers (channel partners) in an ever-increasing subscription world,” Diane Krakora, principal at channel consultant PartnerPath. “Apollo is likely going to restructure Tech Data to increase operational efficiencies (for example, do more with fewer people) and produce new services that provide more value to the channels and brands/vendors in cloud/subscription models — likely expecting to charge additionally for these offerings like business intelligence data (who is buying what products and what is sold together) and services like customer provisioning and cloud marketplaces.”