10 eye-catching statements from Synnex and Tech Data CEOs on their $7.2bn merger

Rich Hume and Dennis Polk open up on rationale behind deal that will create world's largest distributor

Synnex and Tech Data earlier today confirmed they are merging to form a $57bn-revenue global distributor.

Here we round up some of the more eye-catching quotes from Tech Data CEO Rich Hume and Synnex CEO Dennis Polk on their investor call following the deal.

On abandoning 40 years of rivalry…

Polk:

"Today is an important and transformative day for the technology distribution industry as Synnex and Tech Data come together. For over four decades, we have each worked to help our customers and partners grow and achieve their strategic priorities. We have both been leaders in the space and I and the entire management team have the utmost respect for the team at Tech Data and what they have created…"

On the ‘complementary' nature of the deal…

Polk:

Whilst on the surface we appear to be similar companies, we are actually very complementary to each other from a geographical perspective, OEM representation, customer segments served and services offered. Thus the combined company will be able to bring additional services and capabilities to our respective partners. Even with a well-planned and executed strategy I'm not sure we could have achieved over time all that is accomplished with this merger……

Hume:

Together, Synnex and Tech Data will have a global footprint that serves over 100 countries across the Americas, Europe and Asia Pacific. This combination brings new market opportunities for both companies. For example, Synnex has a well-established presence in Japan, where Tech Data does not. Similarly, Tech Data is a well-established business across Europe where Synnex has a more limited access.

On accelerating growth as a combined company…

Polk:

We do expect there's a significant opportunity to grow the company faster than the market rate. We really are two very complementary businesses…. In each company's case, there are some limitations to what is offered…. We think our customers will enjoy the benefit of the combined company and we think that will drive solid market growth from the combined company.

On plans to achieve $200m in annual cost synergies…

Polk:

From a synergy standpoint there are benefits from this transaction. We are two very well-run companies, but when we bring the two companies together we have an opportunity to leverage our IT systems. Synnex has its own internal ERP system that's been very beneficial to us, and we think that's a key area where we can garner a lot of synergy savings going forward. Additional areas are facility consolidations of the two companies. There's also quite a bit of corporate spend that will be saved as we bring the two companies together.

On combining and expanding the combined line card…

Hume:

We believe we will have absolutely the most comprehensive portfolio in the market, with over 200,000 offerings…

We absolutely need to make sure we are servicing our core business today… but we share a common vision in the future as to where we will incrementally invest. And that would be in the areas of cloud, business analytics, security and IoT. Within the IT market they offer accelerated growth opportunities and we're going to make sure we can support vendors and customers with those needs going forward.

On how the move has gone down with big vendors and resellers…

Polk:

We did have a chance through a diligence process to talk to a very good cross section of our partners and the feedback has been overwhelming positive.

On the $7.2bn valuation of the deal…

Polk:

The multiple of this transaction is consistent with multiples that have been paid in similar transactions in our industry, including our most recent TS transaction with Westcon-Comstor. It's also similar to the multiple that was paid when Apollo took Tech Data private. The key thing to realise is that since the announcement of Tech Data and Apollo in 2019, Tech Data has grown and improved its business, so that's added to the value of the company. That was factored in when we had the negotiations with the company.

On Apollo's 45 per cent stake in the enlarged company…

Hume:

They view their engagement with IT distribution as sort of a journey here, and this is just part of that journey. They will continue to be a meaningful investor as we move forward.

On the demand outlook for 2021…

Polk:

We do think [workforces returning to office] will provide a tail wind overall because as I think we all know the work environment going forward won't be like the work environment it was prior to the pandemic. So companies will have to invest in additional IT capabilities to handle the remote work force either from home or at the office. And we think that will be a tailwind for our business and that should provide a good set up for us for the rest of the year and beyond.