Through the 7.2B USD merger of Synnex and Tech Data, the world’s largest tech distributor is created. Synnex owns 55% of the combined company, with 57B USD sales. Appollo Global, the private equity firm that took Tech Data private, owns the other 45%. The combined distributor has a strong footprint in the Americas, Europe, and Asia-Pacific. The market share after the merger is around 30% of the global tech distribution market of around 187B USD in 2019 according to marketresearch.com.
Therefore the merger is a major consolidation shakeup in global tech distribution. Ingram Micro, recently taken private by Platinum Equity, comes second with 47B USD in annual sales in 2019. Probably, this will speed up alternative merger options to help Ingram Micro close the gap with the new No 1. It’s not where you want to be: No 2 in a low-margin, economies-of-scale driven business.
What will be the effect of the merger between Synnex and Tech Data? For global tech brands, there is now even less way around US-centered global distributors. At first, the merger reduces competition. This means that through synergies and a better negotiation position, distribution margins should improve somewhat. Because of divide and rule policies, global brands might rebalance their distribution between the two remaining giants in the coming years. This is an advantage for Ingram Micro. But, rebalancing distribution flows is also beneficial for the 100s of regional distributors (see the Iceshop Vendor Network). But, staying regional is for these local contenders not enough. Because the globalizing e-commerce market demands global logistics service providers, which are easy to integrate in global backoffices.
Read further: News, global distribution, Ingram Micro, merger, Synnex, tech data
Founder and CEO of Icecat NV. Investor. Ph.D.
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