Global wholesale distributor of technology products Tech Data Corp. (TECD:NASDAQ), announced that it has "entered into an amendment to its previously announced definitive agreement in which Tiger Midco LLC, an affiliate of funds managed by affiliates of Apollo Global Management Inc (APO:NYSE), will acquire all of the outstanding shares of Tech Data common stock."
The offer comes two weeks after Apollo made an initial offer of $130 per share for the company on November 13, 2019. The report indicated that "the Amendment provides that the consideration to be received by holders of Tech Data common stock has been increased to $145 per share in cash from $130 per share in cash, among certain other changes."
The revised purchase price represents an 11.5% increase in share price of Tech Data's common stock provided in the original agreement and was unanimously approved by Tech Data's Board of Directors. The firm states that the revised transaction has an enterprise value of approximately $6.0 billion.
The company also noted that there was a "go-shop" provision in the original agreement. Pursuant to that provision, the company received a competitive takeover offer from another unnamed bidder on November 23, 2019, which the Board of Directors deemed to be a superior proposal to the initial bid from Apollo. It was rumored and widely reported today that that offer may have come from Berkshire Hathaway Inc. (BRK/A:NYSE) at a price of $140.00 per share.
Tech Data commented that, "In response, on November 27, 2019, Tiger Midco submitted a revised proposal with the terms set forth in the Amendment. After considering the revised proposal, later in the day on November 27 the Tech Data Board of Directors determined that the Competing Offer no longer constituted a Company Superior Proposal and determined to enter into the Amendment with Tiger Midco (Apollo)."
The Tech Data Board of Directors indicated that they have unanimously approved the Amendment and recommend that Tech Data shareholders vote in favor of the transaction. The transaction is expected to close in H1/20 subject to the satisfaction of customary closing conditions, regulatory approval, and approval by a majority ownership interest of Tech Data shareholders.
The company notes that even though it approved and accepted the Amended offer, the original agreement permits the company to continue to actively solicit alternative acquisition proposals from third parties during a "go-shop" period from the date of the original agreement prior to December 10, 2019.
Apollo is headquartered in New York and is a global alternative investment manager with approximately $323 billion in assets under management as of September 30, 2019. The firm's shares trade on the New York Stock Exchange under the ticker symbol APO. The company has a market cap of approximately $9.8 billion with around 222.5 million shares outstanding.
Tech Data, based in Clearwater, Fla., is a wholesale distributor of technology products. The company states that it "connects the world with the power of technology, and that its end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow and advance." The company operates in the Americas and Europe and its customers include value-added resellers, direct marketers, retailers and corporate resellers selling products to customers in around 100 countries.
Tech Data started the day with a market cap of about $4.6 billion with approximately 35.45 million shares outstanding. TECD shares opened higher today at $144.40 (+15.40, +11.94%) over the prior trading day's closing price of $129.00. The stock has traded between $144.21 to $145.25 per share today and at present is trading at $144.98 (+$15.98, +12.39%).[NLINSERT]
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