M&A

Tech Data opens up on DLT deal

IT product distributor Tech Data is poised to exit the public markets in the first half of next year after its sale to private equity firm Apollo Global Management closes.

In the meantime, Tech Data will still have to report quarterly financial results and its most recent earnings statement somewhat opens the books on the acquisition of DLT Solutions, a company just like Tech Data but focused on the U.S. public sector.

Tech Data paid $205 million in cash to purchase DLT on Nov. 25, according to the Tech Data's10-Q regulatory filing for its just-ended third quarter.

Clearwater, Florida-based Tech Data’s fourth quarter and year-end financial statement should include results from DLT and so will any other reports after that before the Apollo deal closes. Some estimates peg DLT's annual revenue at around $1 billion. DLT was previously held by private equity firm Mill Point Capital.

By way of comparison, Arrow Electronics paid roughly $280 million in 2015 to acquire immixGroup, one of the other three major public sector IT resellers alongside DLT and Carahsoft.

The publicly-traded Arrow Electronics estimated immixGroup's revenue at that time to be around $385 million. Carahsoft towers over the others with nearly $5 billion in annual sales.

The real drama for Tech Data of course took place two days after it closed the DLT purchase. Tech Data successfully negotiated a higher price from Apollo -- $5.1 billion cash from the original $4.77 billion -- after another $5 billion bid came in to try and top what the private equity firm offered.

That rival bidder: none other than Warren Buffett. He went against most of his own investment principles to take a shot at buying Tech Data.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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