Behind The Scenes: A Timeline Of Apollo's Acquisition Of Tech Data

While Apollo Global Management beat Berkshire Hathaway's bid to acquire Tech Data, it was only one small part of an acquisition bid that started 20 months ago when Apollo talked to then-CEO Robert Dutkowsky about a possible investment in Tech Data.

The Acquisition That Almost Wasn't

The planned acquisition of Tech Data by Apollo Global Management is likely to soon become a reality, with both sides in agreement and no other suitors for the Clearwater, Fla.-based distributor likely to appear.

The story actually started in March of 2018 when Apollo first reached out to Tech Data about investing in the company. It shortly thereafter upped the ante with an acquisition bid that languished for about a year before finally getting done. But finalizing the bid was not simple, especially after Warren Buffet's Berkshire Hathaway made a bid that almost derailed Apollo's plans.

The timeline of the acquisition, as outlined in a Dec. 12 Tech Data SEC filing, was long and involved, and showed how the wheels of the corporate financial and legal teams and the board of directors had to spin before the acquisition got final traction. But it's a fascinating read, with all the work involved behind the scene and the eventual interest of over 50 potential suitors.

Yes, you can read the SEC document, and search through all the legalize to find the timeline, and then search through all the legalize to get the details. Or you can turn the page and learn it all in 10 minutes.

March 2018: Apollo Reaches Out To Tech Data

Late in the month, a representative from Apollo Global Management contacted Robert Dutkowsky, currently the executive chairman of Tech Data’s chairman who at the time also served as CEO, to discuss a possible investment by Apollo in Tech Data and to set up a preliminary meeting.

April 2018: Confidentiality Agreement Signed

In early April, Dutkowsky told Charles Adair, Tech Data’s lead independent director, about the call from Apollo, and Adair agreed that Dutkowsky should meet with Apollo to learn about its interest in Tech Data. The two companies on April 19 signed a confidentiality agreement. For the remainder of the month and into May, Tech Data representatives provided Apollo with limited diligence information to help Apollo decide whether to propose an investment in Tech Data.

Tech Data in April also unveiled a plan for Rich Hume (pictured), then chief operating officer, to take over as CEO over the next few months.

June 2018: Initial Proposal To Acquire Tech Data For $105-110/share

The first acquisition proposal was made on June 1 when Apollo made a preliminary, non-binding proposal for the Apollo Funds to acquire all of Tech Data's common stock for a price of $105 to $110 per share. After discussing the initial acquisition offer with Bank of America Securities and the board of director's outside legal advisor, Tech Data said it would only consider the acquisition if Apollo raised its proposed price to $120 or more per share. Apollo said such a change would require further diligence, and Tech Data's board of directors agreed to help with the additional diligence.

June also saw Hume officially take over as Tech Data's new CEO.

July 2018: Proposed Offer Raised To $120/share

Over the course of nearly two months, Tech Data representatives provided limited diligence information in response to Apollo’s requests. Late that month, at Adair's direction, Tech Data's management said it would not provide additional information and would end discussions unless Apollo submitted a letter of interest to acquire Tech Data at least $120 per share.

Apollo on July 23 told Tech Data it would improve it proposal to $120 per share. Tech Data's board of directors on July 27 met to form a transaction committee of four directors to oversee discussions with Apollo and other potential suitors, and also set a protocol for management interaction with potential bidders that included instructions that management should not discuss any post-acquisition role or compensation without the board of director's authorization.

August 2018: Tech Data Said No To $120/share

Tech Data made more diligence information available to Apollo throughout the month.

However, on August 28, Apollo notified Tech Data that it could not support moving forward towards an acquisition at a price of $120 per share. Once the board of directors was notified of Apollo's stance, Tech Data terminated further discussions with Apollo and stopped providing Apollo with due diligence access.

July 2019: Dinner And New Signs Of Interest

According to Tech Data, nothing happened as far as the proposed acquisition by Apollo between August 28, 2918, and July of 2019, when representatives of Apollo reached out to Dutkowsky (pictured). Dutkowsky, after consulting with Adair, on July 18 had a dinner meeting with Apollo representatives who told him that they in the last year had been closely following Tech Data and that they might follow up after the second fiscal quarter 2020 results were released. Dutkowsky updated Adair after the meeting.

Tech Data closed its second fiscal quarter 2020 on July 31, 2019, and reported the quarter's results on August 30.

September 2019: Apollo Reiterates $120/share Offer, Tech Data Balked

On Sept. 9, Apollo representatives told Dutkowsky that Apollo wanted to resume talks with Tech Data about either Apollo investing in or acquiring Tech Data. On that same day, Dutkowsky told Adair, Hume, and Tech Data Chief Legal Officer David Vetter about his discussions with Apollo. Apollo told Dutkowsky by phone that it was considering sending a letter about a potential transaction, and Dutkowsky told Adair, Hume, and Vetter about the calls.

Apollo on Sept. 24 wrote to Dutkowsky to say Apollo was interested in acquiring 100 percent of Tech Data's common shares at $120 per share, which represented a 16.6-percent premium over the closing price of the company's shares at the close of trading on September 23. Dutkowsky told Adair, Hume, and Vetter about the letter, and the group of them on September 25 discussed the letter with the entire board of directors. Two days later, Dutkowsky told Apollo that, unless Apollo made a more compelling offer, Tech Data's board of directors was not willing to consider the offer, it would not make a counterproposal based on price, and that it was not willing to move forward with diligence.

Early Oct. 2019: Apollo Offers $130/share

Apollo on Oct. 1 sent Dutkowsky a non-binding indication of interest for Apollo to acquire 100 percent of Tech Data's common stock at $130.00 per share, subject to satisfactory completion of diligence. That was a premium of about 24.7 percent over to the closing price the day before. The letter was sent to the board of directors the following day after Dutkowsky told Adair, Vetter, Hume, and Tech Data Chief Financial Officer Charles Dannewitz about it.

Tech Data’s board of directors on Oct. 3 met to consider Apollo's interest and discuss some preliminary materials prepared by BofA Securities provided to the Board in advance of the special meeting. The board also discussed preliminary financial projections through 2023, after which Hume noted that those projections did not reflect expected costs from a planned IT systems upgrade.

Tech Data's board of directors on Oct. 8 met to discuss the Apollo proposal and consider a financial analysis of Apollo's revised offer and other related data. At the end of the meeting, the board formed a committee to handle negotiations with Apollo and other potential suitors who might reach out to Tech Data during the "go-shop" period.

On Oct. 10, Dutkowsky and a representative of BofA Securities contacted Apollo representatives to signal that the board of directors agreed to continue discussions based on the latest indication of interest on condition that Apollo not try to reduce the price and that its due diligence be completed by Nov. 11. The next day, the two companies entered into an updated confidentiality agreement.

Oct. 15, 2019: Acquisition News Breaks

News of the possible acquisition of Tech Data by Apollo Management Group broke on Oct. 15 via Reuters and The Financial Times and other publications. Those reports referred to a proposed purchase price of $130 per share, making the deal worth about $5 billion. Tech Data's share prices, which closed before the reports were published at $111.33 per share, shot up to the $126 to $127 per share range in after-hours trading that day.

Members of Tech Data's management, financial advisor, and public relations teams that night agreed to not provide comment on rumors per the company's normal policy.

Late Oct. 2019: Others Express Interest In Tech Data

Over the next couple days, representatives of Tech Data management met with Apollo and advisors. Then, on Oct. 17, Dutkowsky told Wayne Hanewicz, Tech Data’s corporate vice president, general counsel, Americas and corporate secretary, that he had receive inquiries from about potentially acquiring Tech Data from a financial sponsor identified as “Financial Sponsor A” and from Raymond James & Associates on behalf of Financial Sponsor A. Dutkowsky reminded Hanewicz and Adair that he was a member of Raymond James' board of directors.

Dutkowsky, Adair, and members of Tech Data's management team on Oct. 21 discussed with advisors the interest from Financial Sponsor A. Representatives of Bank of America Securities told Tech Data that Financial Sponsor A would need to identify equity co-investors and its sources of debt funding to finance the acquisition. The next day, Tech Data and Financial Sponsor A signed a confidentiality agreement, after which Financial Sponsor A on Oct. 25 made a non-binding proposal to acquire Tech Data for $130 per share.

In the meantime, another financial sponsor, identified as "Financial Sponsor B," inquired about a possible acquisition of Tech Data.

After meetings to discuss Financial Sponsor A's proposal, Tech Data on Oct. 27 provided that company access to diligence information.

Tech Data on Oct. 29 reviewed a draft of the merger agreement to be sent to Apollo which included a go-shop period to allow the distributor to solicit other potential bidders, as well as setting termination fees under certain conditions should the merger agreement be terminated. The proposed merger agreement was sent to Apollo representatives on Oct. 29 and made available to Financial Sponsor A on Oct. 30.

Tech Data on Oct. 30 also unveiled its planned acquisition of DLT Solutions, a large solution provider the distributor said will help it accelerate growth for partners serving the U.S. federal, state, and local government markets.

Early Nov. 2019: Impacts To Tech Data's Financial Future Evaluated

On Nov. 2, 2019, Adair and Dutkowsky met with Tech Data management and advisor representatives to discuss how an acquisition by Apollo might impact both its DLT acquisition and the planned upgrade of Tech Data's IT systems. For the next few days, Tech Data discussed the Apollo offer and received equity and debt commitments from Apollo.

By Nov. 5, Financial Sponsor A was found to need substantial work to show it had the proper equity and debt financing, and Financial Sponsor B backed out of its interest in acquiring Tech Data. That day, a third financial sponsor, identified as Financial Sponsor C, indicated interest in acquiring Tech Data, but said it needed time to determine whether to prepare a proposal. At this time, Apollo told Tech Data it wanted to delete the go-shop provision, but Tech Data pushed back.

Over the next few days, Tech Data reviewed its planned acquisition of DLT and IT upgrade and their impact on the company's finances, with a lot of input from Hume. Hume also discussed the company's financials with the board of directors so the company could prepare a preliminary report on its quarterly financials to Apollo. Tech Data also asked Apollo to confirm its bid of $130 per share, which it did on Nov. 11.

Nov. 12-13, 2019: Tech Data Announces Planned Acquisition By Apollo

On Nov. 12, Tech Data's board of directors decided the Apollo offer was fair to the distributor's shareholders, and discussed the fact that the discussions with Financial Sponsor A, Financial Sponsor B, and Financial Sponsor C had not progressed. Later that evening, Tech Data and Apollo agreed on the terms of the merger and exchanged all the relevant documentation.

Nov. 13 saw Tech Data officially announced it would be acquired by Apollo Global Management via a press release published before the opening of trading on Tech Data's shares. At that time, the official go-shop period commenced, and representatives of Bank of America Securities reached out to four potential strategic bidders and 56 potential financial sponsor bidders, including Financial Sponsor A, Financial Sponsor B, and Financial Sponsor C, to discuss potential interest in submitting proposals for transactions with Tech Data that would be superior to that offered by Apollo Global Management. Four potential financial sponsor bidders, including Financial Sponsor C and Berkshire Hathaway, signed confidentiality agreements with Tech Data and were provided access to the company's data. Financial Sponsor A had already signed that confidentiality agreement.

Late Nov. 2019: Enter Berkshire Hathaway

Berkshire Hathaway on Nov. 19 requested a meeting with Tech Data management to discuss a possible acquisition bid, and the two signed a confidentiality agreement on Nov. 22. Berkshire provided a proposed merger agreement based on the one offered by Apollo Global Management but with a few terms more favorable to Tech Data, including financing the acquisition with cash on hand. After a couple days of discussion, Tech Data's board of directors determined that the Berkshire offer was a "Company Superior Proposal," and gave Apollo three days negotiate further with Tech Data or risk having its acquisition agreement terminated.

Early Nov. 27, Apollo sent Tech Data a binding written proposal modifying its agreement to increase is offer to $145 per share, as long as Apollo's proposal was kept confidential, and as long as Tech Data agreed to execute the agreement no later than 8 pm ET that day. The board of directors unanimously agreed that the Berkshire offer was no longer a Company Superior Proposal, and that the Apollo offer was in the best interest of Tech Data and its shareholders.

Berkshire then told Tech Data it would not improve its offer for Tech Data. Tech Data on Nov. 28 announced the new $145-per-share offer from Apollo.

December 2019: Wrapping Up

Tech Data on Dec. 2 closed its acquisition of DLT Solutions, and on Dec. 10 said that its go-shop provision had expired, leaving Apollo Global Management as its final bidder.

Tech Data, in an SEC filing on Dec. 12, confirmed that Berkshire Hathaway made a bid of $140 per share for Tech Data.