distributor of information technology products

Platinum Equity has agreed to acquire Ingram Micro, a distributor of information technology products, from HNA Group, in a transaction valued at $7.2 billion.

Ingram Micro’s products include desktop, laptop and mobile computer systems; audio and video devices; monitors and displays; data capture and point of sale devices; cybersecurity; cables; and a wide range of additional devices and accessories. The company has more than 2,000 vendors including Acer, Apple, Cisco, Citrix, HP, IBM, Lenovo, Microsoft, Samsung, and VMware.

Ingram Micro operates 190 distribution and logistics centers throughout North America, Europe, the Middle East, Africa, Latin America and Asia Pacific that serve more than 250,000 customers in just over 160 countries.

“We know Ingram Micro and the industry very well and have been investors in the technology and IT distribution and solutions sectors for more than a decade,” said Jacob Kotzubei, a partner at Platinum. “We have been pursuing this opportunity for a while and have been impressed by the company’s ability to thrive while continuing to navigate these fluid and challenging times. We will work closely with the Ingram Micro leadership team to sustain that momentum and build on the company’s success.”

Ingram Micro was founded in 1979 as Micro D, Inc. by husband and wife team, Geza Czige and Lorraine Mecca. The company was acquired by Ingram Industries in 1989 and went public as Ingram Micro in 1996. HNA Group, through Tianjin Tianhai Investment, acquired Ingram Micro in December 2016 for $6 billion. Today, Ingram Micro, led by CEO Alain Monié, has more than 35,000 employees and is headquartered in Irvine, California.

“Ingram Micro is an industry leader, one of the largest companies in the world and will be a cornerstone investment in our portfolio,” said Tom Gores, Platinum’s CEO. “We have the resources and the experience to help the company pursue an aggressive agenda of growth and transformation.”

For the trailing twelve months through September 2020, Ingram Micro’s revenues were $46 billion, with a gross profit of $3.5 billion (7.6% GPM), and EBITDA of $1.0 billion (2.3% EBITDA margin). With a purchase price of $7.2 billion, this yields a TTM EBITDA purchase price multiple of approximately 7.2x.

Platinum Equity invests in a range of industries including manufacturing, distribution, transportation and logistics, equipment rental, metals services, media and entertainment, technology, and telecommunications. The firm is currently investing from Platinum Equity Capital Partners V LP, a $10 billion buyout fund, and Platinum Equity Small Cap Fund LP, a $1.5 billion buyout fund focused on the lower middle market. The firm has completed more than 300 acquisitions since its founding in 1995 and is headquartered in Beverly Hills.

“Platinum’s sector expertise, global operating capabilities and financial resources make it the ideal partner,” said Mr. Monié. “Teaming with Platinum provides an opportunity to further strengthen our competitive advantage in the cloud, speed our digital transformation, and accelerate the expansion of our solutions and services portfolio. We will also be able to broaden our geographic reach even faster while penetrating new industries and verticals.”

Morgan Stanley and Goldman Sachs are the financial advisors to Platinum Equity on this transaction. Committed debt financing has been obtained by J.P. Morgan, Bank of America and Morgan Stanley Senior Funding. J.P. Morgan is the financial advisor to HNA Group.

This transaction is expected to close in the first half of 2021.

© 2020 Private Equity Professional | December 10, 2020

Publicly traded Tech Data has agreed to be acquired by Apollo Global Management at an enterprise value of $5.4 billion or $130 per share. The EBITDA valuation multiple for this transaction appears later in this article.

Tech Data is a distributor of information technology products including software, networking and communications, mass storage, peripherals and computer systems. In addition to distributing more than 75,000 products from over 1,000 manufacturers and publishers, Tech Data provides pre-sale and post-sale training, service and support. The company also offers data center services including storage, networking, servers, and advanced technology software.

Tech Data’s customers include value-added resellers, direct marketers, retailers, corporate resellers, and managed service providers located in more than 100 countries in North America, South America, Europe, the Middle East, Africa, and the Asia-Pacific region.

Tech Data was founded by Edward Raymund in November 1974 as a reseller of data processing supplies for mini and mainframe computers. In 1983, the company began to transition from just a reseller to a full-line national distributor of personal computer products, a transition led by Steven Raymund, the founder’s son, who became Tech Data’s CEO in 1986, the same year Tech Data went public. Today, Tech Data (NASDAQ: TECD) is ranked No. 88 on the Fortune 500 and is led by CEO Rich Hume with a headquarters in Clearwater, Florida.

“Over our 45-year history, Tech Data has grown to become one of the largest and most respected technology distributors in the world,” said Mr. Hume, who will continue to lead the company under Apollo ownership. “This agreement reflects the significant progress we have made in our strategy of delivering higher value and positions us for continued growth and success.”

Over the last four quarters, ending July 31, Tech Data had revenues of $37.1 billion, gross profit of $2.3 billion (GPM of 6.2%) and $675 million of EBITDA (EM of 1.8%). With an enterprise value of $5.4 billion, this yields an EBITDA valuation multiple of exactly 8.0x.

“Through this investment, we are committed to expanding Tech Data’s position as a trusted partner to the world’s leading technology vendors while providing best-in-class customer service,” said Matt Nord, co-lead partner of Apollo Private Equity. “As a private company with our sponsorship and a strong balance sheet, Tech Data will have significant financial and strategic flexibility to drive growth going forward.”

Apollo’s (NYSE: APO) private equity funds have acquired more than 150 companies since its founding in 1990 and has more than $77 billion in assets under management. The firm’s latest private equity fund, its ninth, closed in 2017 with more than $24 billion of capital commitments.

Tech Data’s board of directors has unanimously approved the transaction with Apollo and has recommended that its shareholders vote in favor of the transaction. The purchase agreement includes a go-shop provision through December 9, 2019.

Apollo’s offer for Tech Data is not subject to a financing condition and the transaction is being backed by Citi, J.P. Morgan, Wells Fargo, Barclays and RBC Capital Markets.

Citi is the lead financial advisor to Apollo in connection with the transaction with J.P. Morgan and Wells Fargo also serving as financial advisors. Bank of America Securities is the financial advisor to Tech Data.

The transaction is expected to close no later than June 30, 2020.

© 2019 Private Equity Professional | November 14, 2019