SYNNEX CORPORATION (NYSE:SNX) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement.
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On June 5, 2017, SYNNEX Corporation (SYNNEX), announced that it
entered into a Share Purchase Agreement (the Purchase Agreement)
with Datatec Limited, a public limited company organized and
existing under the laws of the Republic of South Africa (Parent)
and Datatec PLC, a public limited company organized and existing
under the laws of the United Kingdom, and a wholly-owned
subsidiary of Parent (UK Parent Subsidiary and together with
Parent, the Seller Entities), to which SYNNEX will purchase the
North America and Latin American distribution business of the
Seller Entities through the purchase of 50% of the shares of
Westcon Group, Inc., a company incorporated in the State of
Delaware, and a wholly-owned subsidiary of UK Parent Subsidiary
(Westcon), and will also purchase 10% of the shares of each of
Westcon Emerging Markets Group (Pty) Limited, a company
incorporated in the Republic of South Africa and a wholly owned
subsidiary of Parent (SA Company), and Westcon Group European
Holdings, Limited, a company organized and existing under the
laws of the United Kingdom and an indirect subsidiary of the
Seller Entities (UK Company) (collectively, all shares of
Westcon, SA Company and UK Company being purchased, referred to
as the Shares and such transaction, the Transaction). Each of
SYNNEX and the Seller Entities are sometimes hereinafter referred
to as a Party and collectively as the Parties.
entered into a Share Purchase Agreement (the Purchase Agreement)
with Datatec Limited, a public limited company organized and
existing under the laws of the Republic of South Africa (Parent)
and Datatec PLC, a public limited company organized and existing
under the laws of the United Kingdom, and a wholly-owned
subsidiary of Parent (UK Parent Subsidiary and together with
Parent, the Seller Entities), to which SYNNEX will purchase the
North America and Latin American distribution business of the
Seller Entities through the purchase of 50% of the shares of
Westcon Group, Inc., a company incorporated in the State of
Delaware, and a wholly-owned subsidiary of UK Parent Subsidiary
(Westcon), and will also purchase 10% of the shares of each of
Westcon Emerging Markets Group (Pty) Limited, a company
incorporated in the Republic of South Africa and a wholly owned
subsidiary of Parent (SA Company), and Westcon Group European
Holdings, Limited, a company organized and existing under the
laws of the United Kingdom and an indirect subsidiary of the
Seller Entities (UK Company) (collectively, all shares of
Westcon, SA Company and UK Company being purchased, referred to
as the Shares and such transaction, the Transaction). Each of
SYNNEX and the Seller Entities are sometimes hereinafter referred
to as a Party and collectively as the Parties.
to the terms of the Purchase Agreement, at the closing of the
Transaction (the Closing), SYNNEX will purchase from the Seller
Entities the Shares for an aggregate consideration consisting of:
(i) at Closing, (a) $130 million in cash and (b) $500 million in
shares of SYNNEX common stock, par value $0.001 per share;
provided, however, that if the twenty (20) day volume-weighted
average of SYNNEX common stock trading price ending on the
trading day that is the second trading day prior to the date that
certain closing conditions have been met is greater than the
twenty (20) day volume-weighted average of SYNNEX common stock
trading price ending on the trading day that is the second
trading day prior to the date of the Purchase Agreement by 3.75%
or more, SYNNEX may elect to pay an aggregate of $630 million at
Closing in cash in lieu of the issuance of its common stock (the
Cash Election); and (ii) a potential earnout amount of up to $200
million if certain gross profit measures are achieved by Westcon
and its subsidiaries during the twelve-month period ending
February 28, 2018.
Transaction (the Closing), SYNNEX will purchase from the Seller
Entities the Shares for an aggregate consideration consisting of:
(i) at Closing, (a) $130 million in cash and (b) $500 million in
shares of SYNNEX common stock, par value $0.001 per share;
provided, however, that if the twenty (20) day volume-weighted
average of SYNNEX common stock trading price ending on the
trading day that is the second trading day prior to the date that
certain closing conditions have been met is greater than the
twenty (20) day volume-weighted average of SYNNEX common stock
trading price ending on the trading day that is the second
trading day prior to the date of the Purchase Agreement by 3.75%
or more, SYNNEX may elect to pay an aggregate of $630 million at
Closing in cash in lieu of the issuance of its common stock (the
Cash Election); and (ii) a potential earnout amount of up to $200
million if certain gross profit measures are achieved by Westcon
and its subsidiaries during the twelve-month period ending
February 28, 2018.
The Purchase Agreement contains termination rights for SYNNEX and
the Seller Entities in certain circumstances. Upon termination of
the Purchase Agreement by SYNNEX in the event the Seller Entities
breach the terms of their non-solicit obligations or in the event
of an adverse recommendation change, or upon termination of the
Purchase Agreement by the Seller Entities to enter into a
definitive agreement with respect to a superior proposal, the
Seller Entities are required to pay SYNNEX a termination fee of
$24.9 million. Additionally, in the event the Purchase Agreement
is terminated because Parent shareholder consent is not obtained
or certain lender consents are not obtained, the Seller Entities
are required to pay SYNNEX a termination fee of $3.0 million, and
in the event of a Cash Election, if the Purchase Agreement is
terminated because certain lender consents are not obtained,
SYNNEX is required to pay the Seller Entities a termination fee
of $3.0 million.
the Seller Entities in certain circumstances. Upon termination of
the Purchase Agreement by SYNNEX in the event the Seller Entities
breach the terms of their non-solicit obligations or in the event
of an adverse recommendation change, or upon termination of the
Purchase Agreement by the Seller Entities to enter into a
definitive agreement with respect to a superior proposal, the
Seller Entities are required to pay SYNNEX a termination fee of
$24.9 million. Additionally, in the event the Purchase Agreement
is terminated because Parent shareholder consent is not obtained
or certain lender consents are not obtained, the Seller Entities
are required to pay SYNNEX a termination fee of $3.0 million, and
in the event of a Cash Election, if the Purchase Agreement is
terminated because certain lender consents are not obtained,
SYNNEX is required to pay the Seller Entities a termination fee
of $3.0 million.
Prior to the closing of the Transaction, the Seller Entities will
make certain corporate, tax and commercial reorganizations, such
that, at Closing, Westcon and its subsidiaries will own only
those assets that are used primarily for the benefit of the
business in North America and Latin America, or which are
necessary for the conduct of such business, subject to certain
exceptions..
make certain corporate, tax and commercial reorganizations, such
that, at Closing, Westcon and its subsidiaries will own only
those assets that are used primarily for the benefit of the
business in North America and Latin America, or which are
necessary for the conduct of such business, subject to certain
exceptions..
In connection with the Transaction, SYNNEX will enter into
certain additional agreements at Closing with the Seller Entities
and certain of their affiliates, including a Side Letter
Agreement which will provide SYNNEX with an option for twelve
(12) months following the Closing to purchase additional shares
of each of SA Company and UK Company such that, following such
exercise, SYNNEX would own, together with the shares of such
entities purchased at Closing, 20% of each of SA Company and UK
Company. Additionally, if no Cash Election is made, SYNNEX will
also enter into an Investor Rights Agreement with UK Parent
Subsidiary at Closing which provides, among other things, UK
Parent Subsidiary with a right to nominate one person to the
board of directors of SYNNEX, subject to certain conditions, and
registration rights with respect to the shares of SYNNEX common
stock issued at Closing.
certain additional agreements at Closing with the Seller Entities
and certain of their affiliates, including a Side Letter
Agreement which will provide SYNNEX with an option for twelve
(12) months following the Closing to purchase additional shares
of each of SA Company and UK Company such that, following such
exercise, SYNNEX would own, together with the shares of such
entities purchased at Closing, 20% of each of SA Company and UK
Company. Additionally, if no Cash Election is made, SYNNEX will
also enter into an Investor Rights Agreement with UK Parent
Subsidiary at Closing which provides, among other things, UK
Parent Subsidiary with a right to nominate one person to the
board of directors of SYNNEX, subject to certain conditions, and
registration rights with respect to the shares of SYNNEX common
stock issued at Closing.
Completion of the Transaction is subject to customary closing
conditions, including, but not limited to, Parent shareholder
approval, the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and other similar antitrust laws in
jurisdictions outside the United States, approval of the South
African Reserve Bank in accordance with the Exchange Control
Regulations, and other regulatory approvals.
conditions, including, but not limited to, Parent shareholder
approval, the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and other similar antitrust laws in
jurisdictions outside the United States, approval of the South
African Reserve Bank in accordance with the Exchange Control
Regulations, and other regulatory approvals.
The Board of Directors of SYNNEX unanimously approved the
Purchase Agreement and determined that the transactions
contemplated thereby, including the Transaction, were advisable,
fair to and in the best interest of SYNNEX and its stockholders.
Purchase Agreement and determined that the transactions
contemplated thereby, including the Transaction, were advisable,
fair to and in the best interest of SYNNEX and its stockholders.
The foregoing description of the Purchase Agreement is
qualified in its entirety by reference to the full text of the
Purchase Agreement, a copy of which is attached hereto as
Exhibit 2.1 and is incorporated herein by reference. The
Purchase Agreement has been attached to provide investors with
information regarding its terms. It is not intended to provide
any other factual information about the Parties. In particular,
the assertions embodied in the representations and warranties
contained in the Purchase Agreement are qualified by
information in confidential Disclosure Letters provided by each
Party in connection with the signing of the Purchase Agreement.
These confidential Disclosure Letters contain information that
modifies, qualifies and creates exceptions to the
representations and warranties set forth in the Purchase
Agreement. Moreover, certain representations and warranties in
the Purchase Agreement were used for the purpose of allocating
risk between the Parties rather than establishing matters as
facts. Accordingly, you should not rely on the representations
and warranties in the Purchase Agreement as characterizations
of the actual state of facts about the Parties.
qualified in its entirety by reference to the full text of the
Purchase Agreement, a copy of which is attached hereto as
Exhibit 2.1 and is incorporated herein by reference. The
Purchase Agreement has been attached to provide investors with
information regarding its terms. It is not intended to provide
any other factual information about the Parties. In particular,
the assertions embodied in the representations and warranties
contained in the Purchase Agreement are qualified by
information in confidential Disclosure Letters provided by each
Party in connection with the signing of the Purchase Agreement.
These confidential Disclosure Letters contain information that
modifies, qualifies and creates exceptions to the
representations and warranties set forth in the Purchase
Agreement. Moreover, certain representations and warranties in
the Purchase Agreement were used for the purpose of allocating
risk between the Parties rather than establishing matters as
facts. Accordingly, you should not rely on the representations
and warranties in the Purchase Agreement as characterizations
of the actual state of facts about the Parties.
The full text of SYNNEX press release announcing its entry into
the Purchase Agreement is attached as Exhibit 99.1 to this
Current Report on Form 8-K and incorporated herein by
reference. All references to www.synnex.com in Exhibit 99.1 are
inactive textual references only and the information contained
on such website is not incorporated by reference into this
Current Report on Form 8-K.
the Purchase Agreement is attached as Exhibit 99.1 to this
Current Report on Form 8-K and incorporated herein by
reference. All references to www.synnex.com in Exhibit 99.1 are
inactive textual references only and the information contained
on such website is not incorporated by reference into this
Current Report on Form 8-K.
Note on Forward-Looking Statements
Certain statements in this filing including, but not limited
to, statements regarding the purchase price and Cash Election;
earnout; internal reorganization; entry into additional
agreements at Closing and the rights and obligations contained
therein; the ability to consummate the Transaction; and any
statements of assumptions underlying any of the foregoing are
forward-looking statements within the meaning of the Private
Securities Reform Act of 1995 that are subject to risks and
uncertainties that could cause results to be materially
different than expectations. Such risks and uncertainties
include, but are not limited to, the risk that the Transaction
will not be consummated; failure to receive regulatory approval
for the Transaction; risks associated with the Transaction
including the ability to successfully integrate employees and
operations; diversion of managements attention; retaining key
employees; risks associated with international operations; and
other risks detailed from time to time in the reports SYNNEX
files with the U.S. Securities and Exchange Commission (the
SEC) including SYNNEX Form 10-K for the year ended November 30,
2016 and Form 10-Q for the quarter ended February 28, 2017.
Copies of reports SYNNEX filed with the SEC are posted on its
website and are available from SYNNEX without charge. These
forward-looking statements are not guarantees of future
performance and speak only as of the date hereof, and, except
as required by law, SYNNEX disclaims any obligation to update
these forward-looking statements to reflect future events or
circumstances.
to, statements regarding the purchase price and Cash Election;
earnout; internal reorganization; entry into additional
agreements at Closing and the rights and obligations contained
therein; the ability to consummate the Transaction; and any
statements of assumptions underlying any of the foregoing are
forward-looking statements within the meaning of the Private
Securities Reform Act of 1995 that are subject to risks and
uncertainties that could cause results to be materially
different than expectations. Such risks and uncertainties
include, but are not limited to, the risk that the Transaction
will not be consummated; failure to receive regulatory approval
for the Transaction; risks associated with the Transaction
including the ability to successfully integrate employees and
operations; diversion of managements attention; retaining key
employees; risks associated with international operations; and
other risks detailed from time to time in the reports SYNNEX
files with the U.S. Securities and Exchange Commission (the
SEC) including SYNNEX Form 10-K for the year ended November 30,
2016 and Form 10-Q for the quarter ended February 28, 2017.
Copies of reports SYNNEX filed with the SEC are posted on its
website and are available from SYNNEX without charge. These
forward-looking statements are not guarantees of future
performance and speak only as of the date hereof, and, except
as required by law, SYNNEX disclaims any obligation to update
these forward-looking statements to reflect future events or
circumstances.
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Item 9.01
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Financial Statements and Exhibits
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(d) Exhibits
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Exhibit No.
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Description
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2.1
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Share Purchase Agreement among SYNNEX, Datatec
Limited and Datatec PLC dated June 5, 2017.* |
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99.1
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SYNNEX Press Release dated June 5, 2017
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*
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SYNNEX hereby undertakes to furnish supplementally a copy
of any omitted schedule or exhibit to such agreement to the U.S. Securities and Exchange Commission upon request. |
About SYNNEX CORPORATION (NYSE:SNX)
SYNNEX Corporation is a process services company. The Company offers a range of services to resellers, retailers, original equipment manufacturers (OEMs), financial and insurance institutions, and other industry verticals across the world. The Company operates in two segments: Technology Solutions and Concentrix. Its Technology Solutions segment distributes a range of information technology (IT) systems and products, and also provides systems design and integration solutions. Its Concentrix segment offers a portfolio of solutions and end-to-end business outsourcing services, which focuses on customer engagement strategy, process optimization, technology innovation, front and back-office automation and business transformation to clients in approximately 10 industry verticals. Its technology solutions segment also provides systems design and integration solutions. Its Technology solutions segment provides IT solutions in various vertical markets, such as government and healthcare.
