Tech Data to Acquire Technology Solutions Business from Avnet

A Message from our CEO

Robert M. Dutkowsky - Chief Executive Officer

Bob Dutkowsky

Chief Executive Officer

I am excited to announce that Tech Data has agreed to acquire Avnet’s Technology Solutions business, which specializes in data center solutions. This transaction will create a premier global IT distributor with the most diverse end-to-end solutions from the data center to the living room.

This combination complements our value-added distribution capabilities in the Americas and Europe, while establishing Tech Data’s presence in Asia-Pacific, which will be a new market for us. As a result of the enhanced value proposition created through this transaction, Tech Data will be even better positioned to capture opportunities in next-generation technologies, deliver differentiated value to our customers and vendor partners, support career development for our employees, and generate strong returns for our shareholders. We believe the strategic and financial benefits resulting from this transformative combination are compelling for both our company and our stakeholders.

We look forward to welcoming the Technology Solutions team to the Tech Data family and are excited about the future opportunities ahead.

HELPFUL FAQs

What was announced?

Tech Data announced that it has entered into a definitive agreement to acquire the Technology Solutions business from Avnet, Inc. (NYSE: AVT) for $2.4 billion in cash and 2.785 million shares of Tech Data common stock, in a transaction valued at approximately $2.6 billion. With Technology Solutions, Tech Data will be one of the world’s premier global IT distributors with the most diverse end-to-end solutions, from the data center to the living room, with operations in 35 countries.

With Technology Solutions, Tech Data will be one of the world’s premier global IT distributors with the most diverse end-to-end solutions, from the data center to the living room, with operations in 35 countries.

What is Technology Solutions?

Technology Solutions is an operating group of Avnet Inc. that delivers technology services, software, hardware and solutions across the data center, which is complementary to Tech Data’s diversified portfolio of offerings and strategic areas targeted for growth. It partners with more than 40 of the world’s top IT vendors to address the IT business needs of 20,000 customers in more than 80 countries.

Additional information about the Technology Solutions business can be found at http://ats.Avnet.com

What are the terms of the transaction?

Under the terms of the agreement, which was approved by the boards of directors of both companies, Avnet will receive at closing $2.4 billion in cash and approximately 2.785 million shares of Tech Data common stock, representing an approximate 7 percent ownership position in Tech Data.

What are the strategic and financial benefits of this transaction?

Significantly broadens value-added distribution business: Technology Solutions is an established leader in value-added distribution, delivering superior technology solutions, services, software, and hardware across the data center, which is complementary to Tech Data’s diversified portfolio of offerings and strategic areas targeted for growth. On a pro forma basis, Tech Data’s revenues for the 12 months ended July 31, 2016 would have increased from $26 billion to approximately $35 billion, with revenue attributable to complex, higher-margin data center offerings increasing from approximately 29 percent to 45 percent. Pro-forma non-GAAP operating income for the 12 months ended July 31, 2016 would have more than doubled, after expected cost savings.

Increases Tech Data’s ability to capitalize on key next-generation technologies: Next-generation technologies, including converged and hyper-converged infrastructure, security, analytics and the cloud, represent a more than $450 billion market opportunity, which is expected to grow at a 13 percent compounded annual growth rate through 2019. The combination of Tech Data and Technology Solutions will create a premier IT distributor with unmatched skills, consultative expertise, and strong partner relationships to help its customers capture these next-generation technology opportunities.

Extends reach in new and existing regions, creating a more balanced geographic footprint: Tech Data’s data center business is well-established in Europe and has a growing presence in North America. Overall, these regions represented approximately 61 percent and 39 percent of Tech Data’s fiscal year 2016 revenues, respectively. With Technology Solutions, Tech Data will enhance its customer and product portfolios in the Americas and Europe, and establish an immediate presence in the fast-growing Asia-Pacific region, which will be a new market for Tech Data. Following the close of the transaction, Tech Data will expand its operations from 21 to 35 countries worldwide, with Europe comprising 53 percent of the Company’s $35 billion pro forma revenues, the Americas 44 percent and Asia-Pacific 3 percent.

Expands go-to-market capabilities by adding complementary skills, vendor relationships and new customers: Technology Solutions partners with more than 40 of the world’s top IT vendors to address the IT business needs of 20,000 customers in more than 80 countries. Tech Data has similarly strong and diversified relationships with more than 600 vendors and 105,000 customers. As a combined company, the Tech Data and Technology Solutions businesses can offer a broader and differentiated set of solutions to a larger and more diversified customer base, while enhancing relationships with channel partners.

Brings together teams with similar values and cultures: Both Tech Data and Technology Solutions share a corporate culture centered on providing a world-class customer experience through teamwork, integrity, a passion for winning, and innovation. Tech Data expects that these shared values, as well as the expertise and talent from both organizations, will support a smooth integration following the close of the transaction.

When is the transaction expected to close?

The transaction is expected to close in the first half of calendar 2017, subject to customary closing conditions and regulatory approvals.

What does this transaction mean for Tech Data customers?

This is a transformative transaction for Tech Data that we believe will bring significant opportunities to our company, and to our customers and vendor partners.

Tech Data and Technology Solutions have complementary offerings and geographic footprints. Technology Solutions is an established leader in value-added distribution, delivering superior technology services, software, hardware and solutions across the data center, which is complementary to Tech Data’s diversified portfolio of offerings and strategic areas targeted for growth. Together, Tech Data will be the most diverse end-to-end global IT distributor with operations in more than 35 countries.

Innovation and converging technologies are reshaping our industry and, as a result of the broader offering and capabilities created through this transaction, Tech Data will be even better positioned to capture opportunities in next-generation technologies, deliver differentiated value to our customers and vendor partners, support career development for our employees, and generate strong returns for our shareholders.

While we believe there will be many reasons for our customers to be excited about this combination and the value that Tech Data will be able to provide as a result, it is important to emphasize that until the transaction closes, Tech Data will continue to operate as a separate, independent company and will work with customers as usual.

What happens to my contract/agreement at the time of close? Will the terms be honored or re-negotiated?

There will be no changes to Tech Data or Avnet Technology Solutions customer contracts/agreements at the time of close as a result of the transaction. The terms on existing contracts/agreements will continue to be honored.

Will the amount of my credit line change at the time of close?

At the time of close, Tech Data or Avnet Technology Solutions customers who are in good standing will see no changes to their existing credit lines as a result of the transaction. Customers who today have credit lines at both Tech Data and Avnet Technology Solutions will benefit by having access to a combined line of credit equal to the sum of the existing credit lines with each company.

Will there be any changes to Tech Data’s product support as a result of this transaction?

Providing superior customer service and support will remain a priority, just as it is today.

Who should I work with at Tech Data now that this transaction has been announced?

Your Tech Data contact remains the same; we look forward to continuing to work with you as we have in the past.

What does this transaction mean for Tech Data partners / vendors? Will there be any changes in partner / vendor contracts as a result of this transaction?

This agreement is our latest step to ensure Tech Data is well-positioned to continue meeting the needs of our customers and vendor partners in an industry that is seeing significant change as a result of technology innovation and convergence.

Tech Data and Technology Solutions have complementary offerings and geographic footprints. Technology Solutions is an established leader in value-added distribution, delivering superior technology services, software, hardware and solutions across the data center, which is complementary to Tech Data’s diversified portfolio of offerings and strategic areas targeted for growth. Together, Tech Data will be a premier global IT distributor with operations in 35 countries and the most diverse end-to-end solutions from the data center to the living room.

As a result of the broader offering and capabilities created through this transaction, Tech Data will be even better positioned to capture opportunities in next-generation technologies and deliver differentiated value to our vendor partners and customers.

While we believe there will be many reasons for our channel partners to be excited about this combination and the value that Tech Data will be able to provide as a result, it is important to emphasize that until the transaction closes, Tech Data will continue to operate as a separate, independent company and will work with our customers and vendor partners as usual.

Who should I work with at Tech Data now that this transaction has been announced?

Your Tech Data contact remains the same; we look forward to continuing to work with you as we have in the past.

PRESS CONTACT

Brian Kosoy
Director, Corporate Communications
Phone: 727-299-8865
Brian.Kosoy@techdata.com

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