CEO Rich Hume: 10 Boldest Statements On Synnex-Tech Data Merger

Tech Data CEO Rich Hume says the blockbuster Synnex-Tech Data merger will bring benefits for decades to come to both partners and vendors based on the combined company’s ability to invest in future technologies.

A Seminal Moment For IT Industry

Tech Data CEO Rich Hume Monday said the blockbuster Synnex Tech Data merger is a “seminal moment” that will ultimately bring big benefits to partners and vendors for decades to come.

“I‘ve been in this industry for 37 years and I can count on one hand the meaningful moments that that were really game changing,” said Hume, who will lead the combined new company. “For me personally this is one of those meaningful moments that I believe will will drive pretty substantive change for our joint companies, as well as our customers and vendors.”

Hume said the deal opens the door for the combined company to invest heavily in next generation technologies.”I think partners are ultimately going to say the combined company helped them to reposition their business by driving productivity through digital transformation and automation on their behalf,” he sdaid. “That is going to allow their businesses to be more productive and successful. It will be a lift for the entire segment relative to us assisting in positioning them for the future.”

The blockbuster Tech Data Synnex merger creates a $57 billion giant with more than 150,000 customers and 22,000 employees. Synnex and Tech Data will overtake Ingram Micro as the world’s largest IT distributor, coming in nearly $10 billion larger than Irvine, Calif.-based Ingram Micro, which had $47.2 billion in sales in 2019.

The proposed $7.2 billion merger of publicly traded Synnex and private equity owned Tech Data will result in the combined company being 55 percent owned by Synnex shareholders and 45 percent owned by Apollo Global management, which bought Tech Data for $5.4 billion in June 2020

On The Ability To Make Next-Generation Technology Investments

One plus one equals four in terms of next-generation [technology] investments.

One of the more critical aspects of this deal is we all know that the world is transitioning to hybrid cloud, cloud solutions, and as-a-service solutions. When we speak with our vendors and they look to build cloud or as-a-service offerings, they want the ability to come to one platform, write their APIs to that platform and then have an expectation that we will deploy throughout the world with that one connection.

Cloud platforms are extremely critical to the future. By us combining, we‘ll be able to bring expanded investment into those next-generation technology areas

Today we are investing in StreamOne, and Synnex is investing in its StreamOne equivalent, [Stellr]. So now we keep that pool of money that size and actually grow it, but we can eliminate all the duplication that we have between our businesses which will free up money to accelerate as well as bring more capability to partners moving forward.

From a partner perspective, this is a huge win with [the combined company having] the broadest portfolio and the ability to have more capacity for investment that will accelerate next-generation technologies.

On How Complementary Synnex And Tech Data Are As A Combined Entity

As we came to the diligence phase, we validated what we had known, that our businesses are very complementary. There are some line card gaps that we have that we‘ll be able to bring forward to our [Tech Data] customers in terms of the new company. There are some line card gaps on their side that they will have the same opportunity of closing for their customers.

Although we do have some overlap on customers, we also found out that we‘re more independent with our customer relationships than we are overlapping in terms of customers. So we have a great opportunity to bring the totality of this joint portfolio together now without a lot of overlap in the market. So that’s another big benefit.

With regard to the complementary nature of our businesses from a line card perspective, meaning a vendor perspective, our customer diversity is quite enlightening. We really learned about that as we came together and did the due diligence work.

On Creating A Win-Win-Win Scenario

There are a lot of great things here relating to us serving our partners. We will take the time and the executory periods to look at both companies’ assets and determine how we bring those assets together, and if we have some gaps moving forward, we frankly will make sure we make the investment to close those gaps.

This is hugely exciting for us and our business as it relates to our customers and vendors and our colleagues and associates. It’s great for colleagues and associates because growth provides opportunities. This is a win-win for all three of our constituencies.

On The Financial Strength Of Synnex-Tech Data

The financial strength of the combined companies is greater than them sort of singularly sitting alone. Number one is we will have plenty of liquidity to take on growing working capital based on growth for our business going forward. That’s really important. We have a lot of liquidity within our business.

Many of our vendors want to know about the debt structure, and the debt is conservatively levered. And in fact, we would anticipate being investment grade rated. We‘ve had some preliminary discussions with the ratings agencies, and their preliminary report is that we would be investment grade rated That’s a really important fact. Just having a much larger investment capacity allows us to build our new capabilities at a much larger scale than we previously would have, which takes us back to the ‘one plus one equals four.’

On Creating An Industry-Leading Portfolio

The message [to solution providers and vendors] is this creates an industry-leading portfolio with over 200,000 offerings, geographic reach throughout the world, ample credit capacity to help drive into the future with meaningful growth and plenty of capacity for investment to make sure that we have industry-leading capabilities for our partners and vendors moving forward.

The reality is we will have large strategic relationships with the top tier of vendors in the market.

We‘re steadfastly focused on making sure that we have leading capabilities within new next-generation technologies, and we’ll invest as necessary to make sure that we achieve that goal.

We’ll be providing industry-leading capabilities and customer experiences as we move forward.

We make platform investments in our cloud platform. They do the same in their cloud platform. And now we can take that investment and only make one cloud platform investment and use that additional money that no longer has to be spent duplicating platforms on growing capability and capacity.

The Vision For A Combined Synnex-Tech Data

The vision is for us to be able to provide industry-leading solutions across the entire IT portfolio, making the investments necessary to make sure that we keep pace with all of the change within the technology market, and bring state-of-the-art capabilities and solutions to our stakeholders, vendors and partners.

I think partners are ultimately going to say the combined company helped them to reposition their business by driving productivity through digital transformation and automation on their behalf. That is going to allow their businesses to be more productive and successful. It will be a lift for the entire segment relative to us assisting in positioning them for the future.

On How The Deal Came Together

Obviously we jointly had had some discussions over the last couple of months and as we contemplated the benefits for the stakeholders. We said, ‘Let‘s get a pencil to paper here and talk about it.’ So [Synnex President and CEO] Dennis [Polk] and I sort of jointly led this and went from there.

All the compliments go to Dennis. He had a vision for the future. When we got together, we were kind of inspired by how alike our strategies for the future were. All the credit goes to him. He has been a great partner. I‘ve really enjoyed working with him over the last couple of months as we put this deal together, and I look forward to working with him as we endeavor into the future.

Dennis and I have known each other for a good period of time, and when we started to talk in earnest around this, we realized what a great opportunity it would be to bring these two companies together.

I have always been very complimentary of Synnex. They‘re a good shop, and now we have the opportunity to bring two good shops together to create something magical for our partners and vendors moving forward.

On The Impact Of The Deal For ‘Decades To Come’

I‘ve been in this industry for 37 years, and I can count on one hand the meaningful moments that were really game-changing. For me personally this is one of those meaningful moments that I believe will drive pretty substantive change for our joint companies, as well as our customers and vendors.

For me this is a seminal moment. I think that for decades to come there will be benefits from us coming together for customers and vendors based on based our ability and capacity to make investments moving forward on their behalf. And then for our colleagues, it is also a seminal moment because what happens is that growth leads to opportunity. I foresee this as plenty of opportunities for our colleagues and associates to develop their career and accomplish what they want to within the IT space.

On The Power Of Distribution Going Forward

I fundamentally believe that IT distribution has played a really important role in the entire IT ecosystem historically. Our vendors and customers are desiring us to play a really critical role moving forward. That being said, they‘re demanding changes from IT distribution, and those changes are around serving the advanced technologies that are emerging in the market. This merger puts us in a position where we can more meaningfully invest to make sure that the transition [to advanced technologies for partners and vendors] is successful so we can move business into the future and continue to provide the excellent service to customers and vendors that we have historically.

On The Post-Pandemic Opportunity

I mean this from the bottom of my heart: I am thankful every day that I work, and all of us work within the IT category. Regardless of the global situation, IT is at the forefront of the economy. The global pandemic has been no different. As all of the world has transitioned to work from home, IT has been able to help enable that transition. And now we find ourselves looking into the future, and the workplace footprint of the future is clearly going to change. There is going to be more of a hybrid IT environment with work at home and at the office. In order to make sure that businesses run efficiently, as productively as possible, IT will continue to play a part.

The second thing I would tell you is that as we all now are getting vaccinated, and hopefully closer to opening up our economies there is a pent-up demand in what I would call the project-based data center space. That will emerge as an opportunity, probably in the back half of this year. And, once again we‘ll be called upon, across the entire IT ecosystem to help businesses find a new level of technology so that they can position their enterprises to take advantage of things like digital transformation and other areas around IoT and analytics that will emerge.

I see a very bright future for the IT business, and I see a very bright future because of that for our entire business partner channel ecosystem including distributors and partners of all types—solution providers, resellers, ISVs. It is a privilege to be able to work in this industry, and I think that the future is bright for all of us in IT.