September 28, 2016

Tech Data buys business from rival in new $2.6b deal

A new tech merger will give a tech company more assets for expansion.

Tech Data Corporation, a technology products, services and solutions distributor, will soon supplement its own holdings with the tech business of a rival company. According to a Tech Data press release, the company will be able to reach new markets and maintain a strong foothold in the tech sector through its existing presence after this business merger.

The release said that the transaction is worth "approximately $2.6 billion," with $2.4 billion of that in cash, and will grant Avnet 7 percent of Tech Data's ownership. In return, Tech Data will gain Avnet's technology solutions, greater access to business relationships and an enhanced presence in 14 new countries. Since the acquired business works with 20,000 customers, they bring their previous connections to the deal.

Technology Solutions President Patrick Zammit expressed hope for this deal, stating that the company's industry has changed due to "converging technologies," among other things, as well as transformative innovation. This can make the merger more especially important for adapting to the current market climate.

"The broader portfolio created through this combination will enable both businesses to better capitalize on these trends, while also providing new opportunities for Technology Solutions to optimize and expand its offering, as well as unlock value in ways we could not historically," he said.

Though the release did not provide a specific date for the transaction to complete, it did state that approval is expected within the first sixth months of next year.

This merger seems to already have given both participating companies a financial boost. Motley Fool reported that Tech Data Corp.'s share price jumped 22.2 percent on Monday, Sep. 19, following announcement of the deal. In addition, Avnet's stock also increased on the same day, according to MarketWatch, albeit only by 2 percent.