Last week, IT distributors SYNNEX Corporation and Tech Data announced they are merging—making the combined company the largest IT distributor in the world, with approximately $57 billion in annual revenue and over 22,000 employees.
According to SYNNEX President and CEO Dennis Polk, the 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.
Tech Data CEO Rich Hume added that the deal will allow the combined company to offer customers and vendors exceptional reach, efficiency, and expertise; redefining the experience and value they receive.
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Once combined, the company will serve approximately 150,000 customers and 1,500 vendors in more than 100 countries across the Americas, Europe, and Asia-Pacific. It will offer over 200,000 products and solutions.
These offerings include platforms in fast-growing areas like cloud, data centers, security, Internet of Things (IoT), services, 5G, and intelligent edge—fueled by home and return-to-office trends. Merging portfolios is expected to lead to more robust and differentiated offerings, as well as more cross-selling and everything-as-a-service (EaaS) opportunities.
In the document technology arena, Tech Data’s partners include Brother, Canon USA, Epson, Epson Latin America, Fujitsu, Fujitsu DO Brasil STDA, HP Inc., HP Inc. Latin America, Kodak Alaris, Kofax Image Products, Lexmark, Panasonic Systems, Sharp Electronics, Toshiba, and Toshiba Americas. Synnex, meanwhile, partners with companies like Brother Fujitsu, HP Inc., Lexmark, OKI, Panasonic Sharp, and Xerox.
Our View
This news is huge for the business technology industry as the combined company will become the world’s largest IT distributor just ahead of Ingram Micro (which generated $47.2 billion in sales in 2019). It reflects the consolidation occurring in the North American IT distribution market, resulting in just a handful of additional players with more narrow specialties.
With the merger, document technology manufacturers and software companies (and others) can potentially simplify their channel strategies—dealing with one less distributor that (theoretically) has a stronger offering at a lower price (through purchasing efficiencies) in more corners of the world. The capacity for innovation in a larger, more financially strong distributor with greater investment capabilities is also attractive with possible bundling opportunities with other innovative technology companies.
The combined SYNNEX/Tech Data aims to deliver enhanced innovation, agility, and customer service to technology manufactures and software companies, as well as the next stage of the channel (including retailers, resellers, and office equipment dealers) it sells to. While this will hopefully be the case—accelerating technology adoption across the world—it is also true that partners have fewer distributors to work with in the event they are not satisfied.
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