Synnex Stock Booms On Company Split News

The top IT distributor announced on Thursday that it expects to separate into two independent companies as a way to drive a sharper focus on both distribution and business services.

Synnex stock rose Friday on news that it would spin off its Concentrix division into a separate, publicly traded company in the second half of 2020.

Company shares shot up $19.67 to $148.16 in early Friday morning trading before leveling out to around $145 in the afternoon. Still, the stock price was up $16.51 – more than 12 percent -- over the prior day’s close following Synnex’s after-the-bell announcement.

Concentrix, a call center and customer experience line of business, has been built through acquisitions since 2006, including the $550 million, 2013 purchase of IBM’s worldwide customer care business process outsourcing services, as well as the 2018 purchase of Convergys for $2.2 billion. The integration of Convergys into Concentrix happened faster than expected, according to Synnex CEO Dennis Polk.

“We substantially completed the integration and stabilized revenue growth in just one year, far ahead of expectations,” Polk told investors during Thursday’s earnings call. “This aspect, along with the dynamics of operating a nearly $5 billion a year, 225,000 plus associates, CRM services entity under the umbrella of a technology distribution company moved us to the belief that the two segments operating independently would be more beneficial for all stakeholders.”

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Following the split, Synnex Technology Solutions, will continue Synnex's focus on IT distribution. Synnex said this new organization will have annual revenue of about $19 billion, and will still be in the top-three list of distributors in the Americas and Japan. Synnex Technology Solutions will continue to provide a full range of IT-focused distribution, logistics, and integration services.

Concentrix will become one of the world's top-two global provider of services in the eight industry verticals including technology and consumer electronics; banking, financial services, and insurance; healthcare; media and communications; retail and e-commerce; travel and transportation; automotive; and energy and public sector. Synnex said Concentrix currently supports over 125 of the Global Fortune 2000 clients, and has annual revenue of about $4.7 billion.