Thursday, April 15, 2021

Dell to Spin-Off 81% Equity Ownership of VMware

 VMware to pay $11.5-$12.0 billion special cash dividend to all stockholders

The VMware, Inc.‘s Special Committee of independent directors and Dell Technologies have agreed to terms in which VMware will be spun-off from Dell.

The terms include significant simplification to the corporate ownership structure and an $11.5 billion to $12.0 billion special cash dividend recommended by the independent Special Committee and declared by the VMware board to all its stockholders immediately prior to the spin-off and subject to the satisfaction of all closing conditions. Dell Technologies stockholders will receive a pro-rata distribution of VMware shares held by Dell, and Michael Dell and Silver Lake Partners will own direct interests in VMware. The two companies have also finalized a commercial agreement that preserves and enhances their strategic partnership to deliver joint customer value.

VMware’s vision is to create an ubiquitous software and SaaS platform across all clouds and hardware infrastructure that helps accelerate customers’ digital transformation. A spin-off from Dell provides VMware increased freedom to execute its strategy, a simplified capital structure and governance model and additional strategic, operational and financial flexibility, while maintaining the strength of the 2 companies’ strategic partnership.

We will have an enhanced ability to extend our ecosystem across all cloud vendors and on-premises infrastructure vendors and a capital structure that will support growth opportunities,” said Zane Rowe, CFO and interim CEO, VMware. “Our strategic partnership with Dell Technologies remains a differentiator for us, and, as we execute on our multi-cloud strategy, we continue to provide customers our solutions and services on any public cloud and any infrastructure.”

In connection with Dell’ Schedule 13D amendment filed on July 15, 2020, the VMware board formed a Special Committee of independent directors that retained legal and financial advisors to review and evaluate any potential proposal from Dell concerning business opportunities outlined in the Dell filing. The Special Committee evaluated and recommended approval of the transaction and special cash dividend by VMware’s board of directors.

The VMware Special Committee is confident that the spin-off agreement will benefit all stockholders by establishing a simplified capital structure, positioning VMware well to execute on its strategy,” said Paul Sagan, lead independent VMware board member, special committee member and chair of the Compensation and Corporate Governance Committee.

By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders,” said Michael Dell, COB, VMware. “Both companies will remain important partners, with a differentiated advantage in how we bring solutions to customers.”

Through its commercial agreement, the 2 companies will continue to collaborate and co-engineer solutions that provide strategic value to customers, with Dell providing go-to-market scale for VMware’s product portfolio.

The spin-off will provide VMware increased strategic, operational and financial flexibility and agility to drive its growth strategy. This includes simplifying capital allocation decisions and eliminating the current dual class stock structure. In addition, VMware remains committed to an investment grade rating and profile.
The estimated value of the $11.5 billion to $12.0 billion special cash dividend that VMware will provide to all stockholders ranges from $27.43 per share to $28.62 per share, based on outstanding shares as of March 16, 2021.

Thursday, April 01, 2021

Synnex and Tech Data Merging in Transaction Valued at $7.2 Billion


Two huge WW IT distributors with $57 billion in total annual revenue

SYNNEX Corporation and Tech Data Corp.  entered into a definitive merger agreement under which the 2 companies will combine in a transaction valued at approximately $7.2 billion, including net debt.

The combined company, with approximately $57 billion in estimated pro forma annual revenues and a team of over 22,000 associates and colleagues, will provide customers and vendors with expansive reach across products, services, and geographies to accelerate technology adoption.

We are excited to partner with a world-class industry leader like Tech Data and believe that this combination will benefit all our stakeholders,” said Dennis Polk, SYNNEX president and CEO. “This transaction allows for accelerated revenue and earnings growth, an expanded global footprint, and the ability to drive significant operating improvements while continuing to create shareholder value. We look forward to working with the talented colleagues at Tech Data and expect our combined business will create the opportunity for team members to produce the highest levels of service to our partners.”

This is transformational for Tech Data, SYNNEX and the entire technology ecosystem. Together, we will be able to offer our customers and vendors exceptional reach, efficiency, and expertise, redefining the experience and value they receive,” said Rich Hume, Tech Data CEO. “The combined company will also benefit from significant financial strength to invest in its core growth platform as well as next gen cybersecurity, cloud, data, and IoT technologies, which are experiencing explosive growth due to work from home and return to office trends. We could not have reached this milestone without the hard work of our colleagues, and we look forward to working together with the SYNNEX team to seamlessly bring our companies together and to create meaningful value for all our stakeholders.”

Tech Data currently is wholly-owned by funds managed by affiliates of Apollo Global Management, Inc. and their co-investors.

Apollo senior partner and co-head of private equity Matt Nord and Apollo partner Robert Kalsow-Ramos said: “When we acquired Tech Data, we saw the tremendous potential for transformative growth and long-term value creation. This transaction will accelerate the momentum that was already underway by uniting two outstanding companies for greater scale and financial strength to lead the industry. We are excited to remain a part of the new company’s continued success.”

Compelling Strategic Benefits

  • Creates a diversified global solutions aggregator with breadth and depth of capabilities. The combined company will have a global footprint that serves more than 100 countries across the Americas, Europe and AsiaPac regions, and a portfolio of more than 200,000 product and solutions offerings. This meaningful scale will provide increased value and purchasing efficiencies to the combined company’s 150,000 customers and more than 1,500 vendors and enable it to accelerate technology adoption and attract most innovative OEMs.
  • Capitalizes on premier core growth platforms and establishes product offerings in next gen, high-growth areas. The transaction combines each company’s core growth platforms to establish a differentiated end-to-end solutions portfolio and product offerings in some of the largest, highest growth product segments including cloud, data centers, security, IoT, services, 5G, and intelligent edge. The companies’ complementary product line cards and global distribution platform provide diversified revenue streams and cross selling opportunities, including the ability to bring a comprehensive everything-as-a-service (EaaS) offerings to the market.
  • Brings together companies with complementary cultures and a commitment to being an employer of choice in the global IT industry. Both firms have corporate cultures centered on innovation, agility, and customer service. These shared principles, as well as the expertise and talent from both organizations, will support a smooth integration following the close of the transaction.

Transaction Details

  • Under the terms of the agreement, Apollo Funds will receive an aggregate of 44 million shares of SYNNEX common stock plus the refinancing of existing Tech Data net debt and redeemable preferred shares of approximately $2.7 billion.
  • Upon closing of the transaction, SYNNEX shareholders will own approximately 55% of the combined entity, with Apollo Funds owning approximately 45%.
  • Rich Hume will lead the combined company as CEO. Dennis Polk will be executive chair of the board of directors and will take an active role in the ongoing strategy and integration of the business, among other responsibilities.
  • The combined company will have an 11-member board, including Hume, with six individuals appointed by SYNNEX and with Apollo Funds to have board designation rights based on ownership, initially including four total directors, 2 of whom will be independent.
  • Non-GAAP diluted EPS accretion of more than 25% is expected in year one post close, with further accretion expected in year two.
  • Net optimization and synergy benefits of $100 million are expected in the first year after closing, achieving a minimum of $200 million by the end of the second year.
  • The combined company will benefit from a strong financial foundation and an investment grade profile. Based on Lpro-forma adjusted EBITDA of approximately $1.5 billion and expected combined debt of approximately $4.0 billion at close, debt-to-adjusted EBITDA is expected to be approximately 2.7x at transaction close and is expected to decline to approximately 2x within 12 months.
  • The transaction is expected to close in 2H21, subject to the satisfaction of customary closing conditions, including approval by SYNNEX stockholders and regulatory approvals.
  • MiTAC Holdings Corporation and its affiliates, which collectively owned approximately 17% of SYNNEX shares as of January 22, 2021, have agreed to vote their shares in favor of the transaction. Until the transaction is completed, the companies will continue to operate independently