A multi-billion-dollar merger doesn't go unnoticed in the stock market, as evidenced by the combination of two information technology service companies, Synnex Corp. (NYSE:SNX) and Tech Data.
As of Sept. 1, the merger is officially finalized, which creates a fresh operation called TD Synnex. What happens to SNX stock now that the merger is complete?
Synnex and Tech Data finalize merger to become TD Synnex
In a $7.2 billion deal, Synnex and Tech Data have officially merged to become TD Synnex. The combined entity, made up of Clearwater, Fla.-based Tech Data and Fremont, Calif.-based Synnex, is worth a whopping $59.8 billion. The merger makes a substantial mark in the IT industry. The new merger positions TD Synnex as the overall largest IT distributor. Ingram Micro has been pushed down to the second spot for largest IT company following the merger. Ingram Micro held the top position for nearly 30 years.
Synnex stockholders get the bulk of equity under the SNX ticker
With the merger final, SNX shareholders will maintain their equity with 55 percent of the combined company. Synnex CEO Rich Hume will become the CEO of TD Synnex.
Apollo shareholders get the rest
In June 2020, Apollo Global Management (NYSE:APO) acquired Tech Data for $5.4 billion. The remaining equity goes to Apollo shareholders, who will end up with 45 percent equity of the combined company. APO stock will maintain its ticker moving forward. Shareholders will receive 44 billion in common stock ($1.1 billion in cash) following a half a billion-dollar equity contribution and Tech Data net debt refinancing.
Ultimately, the deal is good for both SNX and APO shareholders. The new entity offers 200,000+ products and solutions, maintains more than 1,500 OEM and vendor partners, and serves 150,000+ customers.
How Synnex stock is responding amid merger finalization news
Synnex Corp. (now TD Synnex) stock is up marginally following the merger finalization with a 0.4 percent gain since the market opened on Sept. 1. The shares are up 6.84 percent in the last month due to anticipation of the merger. Despite volatility over the last quarter, SNX stock has gained more than half of its value YTD.
A forecast for SNX stock post-merger
SNX stock is looking bullish from all angles post-merger. Analysts predict that the 12-month gains will hit a median 12.7 percent, with some reaching as high as 22.2 percent in the green during the same period.
As of mid-afternoon on Sept. 1, SNX stock has a market value of $127.57 per share. It will be interesting to see how the combined company's dividend policy changes in subsequent quarters.
With such a massive stake in cloud, cybersecurity, big data analytics, IoT, and mobility (just to name a few of its specialties), TD Synnex could be a real portfolio shifter in the months and years to come. Investors should play the long game with TD Synnex. Its new structure might need time to reach its potential of exceeding market averages.