Tech Data Corp (NASDAQ: TECD)
Tech Data Corp is having an incredibly strong day in the market today, and for good reason. The company is the center of the media at the moment after announcing a key acquisition. Today, we’ll talk about the acquisition, what we’re seeing in the market as a result, and what we can expect to see from TECD moving forward. So, let’s get right to it…
TECD To Acquire AVT
As mentioned above, Tech Data Corp is having a strong session in the market today after announcing a key acquisition. According to the announcement, the company has entered into a definitive agreement with Avnet, Inc. (NYSE: AVT). Under the agreement, Tech Data Corp will Acquire Avnet’s Technology Solutions operating group.
In the announcement, we learned that TECD will be paying a total of approximately $2.6 billion in the acquisition. This will be divided between cash and stock. Under the agreement, the company will pay AVT $2.4 billion in cash as well as provide the company with 2.8 million shares of its common stock. The stock included in the transaction is valued at approximately $200 million.
At the end of the day, the acquisition marks a match made in heaven. Both TECD and AVT operate in the same market. With a heavy focus on becoming an even more major player in the Internet of Things, these two companies compliment each other in a big way. With regard to the acquisition, the CEOs of both companies offered statements. Here’s what they had to say…
“We believe the acquisition of Technology Solutions by Tech Data is the best decision for our employees, customers, suppliers, and shareholders. This transaction presents us with the best strategic path for Avnet’s future success and profitability, and puts Technology Solutions in position to achieve breakthrough business results with Tech Data… Moving forward, Avnet will focus its resources and investments on becoming a leader in design chain and supply chain services not only for our current customers and suppliers, but also for new markets. We will drive targeted investments in embedded solutions, Internet of Things and critical digital platforms. By investing in these high growth areas, we can expand the breadth of our portfolio and attract new customers worldwide who depend on us to deliver world-class solutions.” – William Amelio, CEO at AVT.
“This transformative transaction will position us as a premier global IT distributor with the most diverse end-to-end solutions from the data center to the living room… Tech Data has competed with and admired Avnet Technology Solutions for many years. We’re thrilled to start this journey together and are confident that our customers, vendor partners, employees, and shareholders will appreciate and benefit from the value that we will bring to the market. We look forward to welcoming the Technology Solutions team to Tech Data and are excited for the opportunities that this combination creates.”
What We’re Seeing From The Stock
One of the first things that we learn as investors is that it’s overwhelmingly important to pay close attention to the news. After all, the news moves the market. In this particular case, the news was overwhelmingly positive. As a result, we’re seeing strong gains in the value of TECD stock. Currently (2:44), the stock is trading at $83.76 per share after a gain of $14.42 per share or 20.79% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from Tech Data. First and foremost, today’s acquisition better positions the company in the multi-billion dollar Internet of Things industry. As a global leader in IT, the company only stands to gain from today’s news. All in all, I’m expecting to see long run gains on the stock.
What Do You Think?
Where do you think TECD is headed moving forward and why? Join the discussion in the comments below!