POV on MVS: Synnex and Tech Data Announce Merger
CDS Point of View
Two giants of IT distribution announced a $7.2B merger last month – Tech Data and Synnex are planning to form a $57B giant, with more than 22,000 employees and 200,000 products. Dennis Polk, SYNNEX president and CEO, provided a boilerplate perspective. “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.”
Though third-party maintenance (TPM) is a relatively small part of the combined portfolio, the merger will certainly cause ripples in the TPM markets. If the global giant decides to lean-in on maintenance services, larger TPMs like Park Place and Evernex will face increased competition in all geographies, particularly as the combined entity leverages hardware and software partnerships to cross-sell maintenance services. Firms like Park Place, who compete directly with OEMs, will bear the brunt of those headwinds.
On the other hand, it’s possible that the TPM portfolio takes a backseat to “hot” product sectors like cybersecurity, cloud, and analytics. Important segments like maintenance – that don’t command the industry buzz – could suffer during a portfolio rationalization.
Even if the TPM portfolio survives intact, the reality is that sellers with a 200,000 SKU portfolio will gravitate towards the greatest demand. Given the $100M in ‘synergies’ that are expected in the deal, distractions will abound in the company for the next 12-18 months.
