PRESS RELEASE: SYNNEX Corporation, and Datatec Ltd announced a definitive agreement in which SYNNEX will acquire Datatec’s Westcon-Comstor Americas business and become a minority shareholder in Datatec’s Westcon EMEA and APAC businesses.
“We believe this is a unique opportunity that is transformational to SYNNEX and is aligned to our strategy of positioning the business to where technology is growing. Westcon-Comstor is a recognized leader in the security, UCC and networking space,” stated Kevin Murai, President and CEO of SYNNEX Corp. “The Westcon-Comstor brand has been built over time by a very deep and talented team and we are excited to welcome the Americas team to our family.”
Jens Montanana, CEO of Datatec, stated, “I’m proud of our team and the business they have built over the past thirty years. The SYNNEX culture is similar to Westcon-Comstor and I’m excited about the opportunity to grow our businesses together on a global scale. We share a common vision and strategic objective in addressing the global complexities and emerging demands facing our partners.”
Transaction Details and Impact of Acquisition to Consolidated SYNNEX Corporation Financials:
- $500M in stock and $100M in cash at closing
- Up to $200M earn out if certain financial targets are achieved through Feb 2018
- $30M for 10% ownership of Datatec’s Westcon EMEA and APAC businesses
- Approximately $115 million of net debt will be assumed and refinanced with the close of the transaction
- Option to pay all cash, based on the average share price at closing
- If stock is issued, the SNX Board of Directors will appoint Jens Montanana to the SYNNEX Board of Directors, subject to compliance with legal and regulatory requirements
“We are pleased to welcome a long-term shareholder like Datatec Ltd. The ownership structure serves us well as it aligns our collective long-term goals,” stated Kevin Murai, President and CEO of SYNNEX Corp. “The composition of this transformative acquisition enables SYNNEX to further invest in long-term strategies to grow and diversify our business. Mr. Montanana brings to our board deep practical knowledge in doing business beyond North America.”
For its fiscal year end ended February 28, 2017, the Westcon Americas business generated approximately $2.2 billion of revenue and approximately $89 million in EBITDA. In the first 12 months after close, the Westcon Americas business, excluding integration costs, transaction expenses and intangible amortization, is expected to be mildly accretive to SYNNEX Non-GAAP EPS and then accelerate in year two.
The transaction is expected to close in the third calendar quarter of 2017, subject to the satisfaction of regulatory requirements and customary closing conditions. Until the transaction is completed, the companies will continue to operate independently.
Additionally, while the company is going through the normal quarterly close and reporting process, revenues for the second quarter ended May 31st are now estimated to come in above the high end of our guidance range of $3.575-$3.775 billion and Non-GAAP EPS is estimated to come in above the high end of our guidance range of $1.70 – $1.78. The company will report its Q2 earnings results and hold a conference call on June 22nd.