Why Synnex (NYSE:SNX) Stocks Surged 259%?

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Summary

• Stocks of tech company Synnex Corp (NYSE:SNX, SNX:US) took off on Monday, March 22, after it announced a couple of corporate updates earlier in the day.
• Synnex stocks shot up by nearly 11 per cent in the premarket trading hours on Monday.
• After the markets opened, the stock traded to a high of US$ 112 and finally closed trading after a climb of over six per cent.

Stocks of tech company Synnex Corp (NYSE:SNX, SNX:US) took off on Monday, March 22, after it announced a couple of corporate updates earlier in the day.

Synnex stocks shot up by nearly 11 per cent in the premarket trading hours on Monday. After the markets opened, the stock traded to a fresh 52-week high of US$ 112 and finally closed trading after a climb of over six per cent.

In the last one year, Synnex stocks surged by nearly 259 per cent.

Let’s dive in to find out what triggered this latest spike in Synnex stocks.

©Kalkine Group 2021

Synnex Corp (NYSE:SNX, SNX:US)  

Current Stock Exchange: US$ 107.89

Founded in 1980, Synnex Corp provides services in the areas of wholesale information technology (IT) integration, distribution and outsourcing. The Fremont-based company’s shares are up on the New York Stock Exchange (NYSE).

Synnex Corp announced on Monday that it has signed an agreement to merge with Florida-based Tech Data Corporation Inc in a deal valued at US$ 7.2 billion (including debt). Once combined, the company is expected to have an estimated pro forma annual revenue of  US$ 57 billion and a team consisting of over 22,000 members.

The deal, the official release said, is expected to close by the end of 2021’s second half.

©Kalkine Group 2021

This merger plan between the two IT solution providers comes less than a year after private equity firm Apollo Global Management Inc (NYSE: APO, APO:US) purchased Tech Data in a US$ 6 billion deal. It also takes place after both Synnex and Tech Data, as IT players, noted a surge in their demand amid the pandemic-driven acceleration of digital platform usage.

As a part of the merger deal, Synnex investors will hold about 55 per cent of the combined entity, while Apollo owns the rest and takes four seat at the Board of Directors’ table.

Apollo will also reportedly get a total of 44 million Synnex common shares and see the refinancing of Tech Data’s existing net debt along with its redeemable preferred shares of some US$ 2.7 billion.

Soon after the announcement of this deal, however, global investor rights law firm Halper Sadeh LLP announced on Monday that it will investigating the deal to ensure that the merger is fair to Synnex’s shareholders.

The Californian company also announced its financial results for the fiscal first quarter ending 28 February 2021, which saw its revenue surge by 21 per cent year-over-year (YoY) US$ 4.9 billion. Its non-GAAP operating income was up 35 per cent YoY to US$ 156 million, while its non-GAAP operating margin surged to 3.16 per cent.

Synnex’s generated about US$ 25 million in cash from operations in Q1 FY21.