DEFM14A 1 d105969ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, For Use of the Commission Only (As Permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under §240.14a-12

 

 

SYNNEX Corporation

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

 

Payment of Filing Fee (Check the appropriate box):

  No fee required
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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SYNNEX CORPORATION

44201 Nobel Drive

Fremont, California 94538

June 9, 2021

Dear Stockholders:

You are cordially invited to attend a special meeting of stockholders of SYNNEX Corporation, a Delaware corporation (which we refer to as “SYNNEX,” “we,” “us” or “our”). The special meeting will be completely virtual and conducted via live audio webcast because of the public health impact of the COVID-19 pandemic. The matters to be acted upon are described in the Notice of Special Meeting of Stockholders and Proxy Statement. The formal Notice of Special Meeting and the Proxy Statement have been made a part of this invitation.

You will be able to attend the special meeting by first registering at https://viewproxy.com/synnex/2021sm/htype.asp. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Stockholders will be able to listen, vote, and submit questions during the virtual meeting.

The purpose of the meeting is to consider and vote on proposals relating to the proposed acquisition of Tiger Parent (AP) Corporation, a Delaware corporation (which we refer to as “Tiger Parent”), the indirect parent entity of Tech Data Corporation, a Florida corporation (which we refer to as “Tech Data”). Regardless of whether you plan to attend the special meeting, we encourage you to vote your shares by mail, by telephone or through the internet following the procedures outlined below.

On March 22, 2021, SYNNEX entered into an Agreement and Plan of Merger (which, as it may be amended from time to time, we refer to as the “Merger Agreement”) with Spire Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of SYNNEX (which we refer to as “Merger Sub I”), Spire Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of SYNNEX (which we refer to as “Merger Sub II”) and Tiger Parent, that provides for the acquisition of Tiger Parent by SYNNEX. Subject to approval of SYNNEX’ stockholders and the satisfaction or (to the extent permitted by law) waiver of certain other closing conditions, SYNNEX will acquire Tiger Parent through a two-step merger. Merger Sub I will merge with and into Tiger Parent, with Tiger Parent surviving the merger and becoming a wholly owned subsidiary of SYNNEX (which we refer to as the “Corporate Merger”). Immediately following the Corporate Merger, Tiger Parent will merge with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of SYNNEX (which we refer to as the “LLC Merger”; the Corporate Merger and LLC Merger are referred to collectively as the “Merger”). The Merger is intended to be considered together as a single integrated transaction for U.S. federal income tax purposes and to qualify as a “reorganization” within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (which we refer to as the “Code”).

If the Merger is completed, the aggregate consideration for all the issued and outstanding common shares, $0.01 par value, of Tiger Parent (which we refer to as “Tiger Parent common shares”) will consist of (i) $1.61 billion in cash ($1.1 billion in cash after giving effect to the $500 million equity contribution by Tiger Parent Holdings, L.P. (which we refer to as “Tiger Holdings”), Tiger Parent’s sole stockholder and an affiliate of Apollo Global Management, Inc. (which we refer to as “Apollo”), to Tiger Parent prior to the Effective Time) and (ii) 44 million shares of SYNNEX common stock, plus cash in lieu of any fractional shares of SYNNEX common stock, in each case, without interest (which we collectively refer to as the “Merger Consideration”). The SYNNEX common stock to be issued in connection with the Merger will not be registered under the Securities Act and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. SYNNEX is required to, within two business days after the closing of the Merger, file an automatically effective registration statement registering the resale of such shares.


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As more fully described in the accompanying proxy statement, SYNNEX’ stockholders will also be asked at the special meeting to approve the proposals to amend the Certificate of Incorporation of SYNNEX to (i) increase the number of authorized shares of SYNNEX common stock thereunder from 100 million shares to 200 million shares, in the form attached as Annex B and (ii) waive the corporate opportunity doctrine with respect to certain directors and certain other parties, in the form attached as Annex C.

The proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement. We encourage you to carefully read the accompanying proxy statement and the Merger Agreement attached as Annex A to the proxy statement.

The board of directors of SYNNEX (which we refer to as the “Board”) carefully reviewed and considered the terms and conditions of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement. By a unanimous vote, the Board (i) determined that the Merger Agreement and the transactions contemplated thereby, including the amendments to the Certificate of Incorporation of SYNNEX, the issuance of shares of SYNNEX common stock and the Merger, are fair to, and in the best interests of, SYNNEX and SYNNEX’ stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the amendments to the Certificate of Incorporation of SYNNEX, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, (iii) directed that the Merger Agreement, the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the Certificate of Incorporation of SYNNEX be submitted to SYNNEX’ stockholders for their approval, and (iv) resolved to recommend that the stockholders of SYNNEX adopt the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to SYNNEX’ Certificate of Incorporation on the terms and subject to the conditions set forth in the Merger Agreement.

Accordingly, the Board unanimously recommends a vote “FOR” the proposal to adopt the Merger Agreement, “FOR” the proposal to approve the issuance of shares of SYNNEX common stock in connection with the Merger, “FOR” the proposal to adopt an amendment to the Certificate of Incorporation of SYNNEX to increase the number of authorized shares, “FOR” the proposal to adopt an amendment to the Certificate of Incorporation of SYNNEX to waive the corporate opportunity doctrine with respect to its directors and certain other parties, and “FOR” the proposal to adjourn the special meeting if necessary or appropriate, including to solicit additional proxies.

Your vote is important. Whether or not you plan to attend the special meeting and regardless of the number of shares of SYNNEX common stock you own, your careful consideration of, and vote on, the proposal to adopt the Merger Agreement, the proposals to amend the Certificate of Incorporation of SYNNEX and the other proposals contemplated by the Merger Agreement is important, and we encourage you to vote promptly. The failure to vote will have the same effect as a vote AGAINSTthe Merger Agreement Proposal, the Authorized Share Charter Amendment Proposal and the Corporate Opportunity Charter Amendment Proposal, but will have no effect on the approval of the Share Issuance Proposal or the Adjournment Proposal.

After reading the accompanying proxy statement, please make sure to vote your shares of SYNNEX common stock promptly (1) by completing, signing and dating the accompanying proxy card and returning it in the enclosed prepaid envelope, (2) by telephone or (3) through the internet by following the instructions on the accompanying proxy card. Instructions regarding all three methods of voting are provided on the proxy card. If you hold shares of SYNNEX common stock through an account with a bank, broker, trust or other nominee, please follow the instructions you receive from your bank, broker, trust or other nominee to vote your shares.

Your support of and interest in SYNNEX Corporation is sincerely appreciated.

Dennis Polk

Chief Executive Officer


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Neither the United States Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated June 9, 2021 and is first being mailed to SYNNEX’ stockholders on or about June 9, 2021.

 


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SYNNEX Corporation

 

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

 

To Be Held on June 30, 2021

To the Stockholders of SYNNEX Corporation:

A special meeting of stockholders of SYNNEX Corporation, a Delaware corporation (which we refer to as “SYNNEX,” “we,” “us” or “our”), will be held via live webcast on June 30, 2021, at 10:00 a.m., Pacific Time. You will be able to attend the special meeting by first registering at https://viewproxy.com/synnex/2021sm/htype.asp. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Stockholders will be able to listen, vote and submit questions during the virtual meeting. Please be sure to check in 15 minutes prior to the start of the meeting by 9:45 a.m., Pacific Time, so that any technical difficulties may be addressed before the special meeting live audio webcast begins. Please note that you will not be able to attend the virtual special meeting in person. We are holding the special meeting for the following purposes:

 

  1.

Adoption of the Merger Agreement. To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of March 22, 2021 (which, as it may be amended from time to time, we refer to as the “Merger Agreement”), by and among SYNNEX, Tiger Parent (AP) Corporation, a Delaware corporation (which we refer to as “Tiger Parent”), Spire Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of SYNNEX (which we refer to as “Merger Sub I”) and Spire Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of SYNNEX (which we refer to as “Merger Sub II”), pursuant to which Merger Sub I will merge with and into Tiger Parent, with Tiger Parent surviving the merger and becoming a wholly owned subsidiary of SYNNEX (which we refer to as the “Corporate Merger”), and immediately following the Corporate Merger, Tiger Parent will merge with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of SYNNEX (which we refer to as the “LLC Merger”; the Corporate Merger and LLC Merger are referred to collectively as the “Merger”) (this proposal is referred to as the “Merger Agreement Proposal”);

 

  2.

Issuance of Shares of SYNNEX Common Stock. To consider and vote on a proposal to approve, for the purposes of complying with the applicable provisions of NYSE Listing Rule 312.03 requiring stockholder approval of any issuance of securities that will have voting power of 20% or more of SYNNEX’ currently outstanding voting power, the issuance of an aggregate of 44 million shares of common stock, par value $0.001 per share, of SYNNEX (which we refer to as “SYNNEX common stock”) (this proposal is referred to as the “Share Issuance Proposal”);

 

  3.

Adopt an Amendment to the Certificate of Incorporation of SYNNEX to Increase the Number of Authorized Shares. To consider and vote on a proposal to adopt an amendment to SYNNEX’ certificate of incorporation (which, as it may be amended from time to time, we refer to as the “SYNNEX Certificate of Incorporation”) to increase the number of authorized shares of SYNNEX common stock thereunder from 100 million shares to 200 million shares, in the form attached as Annex B (this proposal is referred to as the “Authorized Share Charter Amendment Proposal”);

 

  4.

Adopt an Amendment to the Certificate of Incorporation of SYNNEX to Waive the Corporate Opportunity Doctrine. To consider and vote on a proposal to adopt an amendment to the SYNNEX Certificate of Incorporation, pursuant to which SYNNEX shall waive the corporate opportunity doctrine with respect to certain directors and certain other parties, in the form attached as Annex C (this proposal is referred to as the “Corporate Opportunity Charter Amendment Proposal”); and

 

  5.

Adjournment or Postponement of the Special Meeting. To consider and vote on a proposal to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies (this proposal is referred to as the “Adjournment Proposal”).


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Stockholders of record at the close of business on June 8, 2021 are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements thereof.

For more information concerning the special meeting, the Merger Agreement, the Merger, the amendments to the SYNNEX Certificate of Incorporation and the other transactions contemplated by the Merger Agreement, please review the accompanying proxy statement and the copy of the Merger Agreement attached as Annex A to the proxy statement.

The Board carefully reviewed and considered the terms and conditions of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement. By a unanimous vote, the Board (i) determined that the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, are fair to, and in the best interests of, SYNNEX and SYNNEX’ stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, (iii) directed that the Merger Agreement, issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation be submitted to SYNNEX’ stockholders for their approval, and (iv) resolved to recommend that the stockholders of SYNNEX adopt the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation on the terms and subject to the conditions set forth in the Merger Agreement.

The Board unanimously recommends that you vote “FOR” the Merger Agreement Proposal, “FOR” the Share Issuance Proposal, “FOR” the Authorized Share Charter Amendment Proposal, “FOR the Corporate Opportunity Charter Amendment Proposal, and “FOR” the Adjournment Proposal.

To assure that your shares of SYNNEX common stock are represented at the special meeting, regardless of whether you plan to attend the special meeting, please fill in your vote, sign and mail the enclosed proxy card as soon as possible. We have enclosed a return envelope, which requires no postage if mailed in the United States.

Alternatively, you may vote by telephone or through the internet. Instructions regarding each of the methods of voting are provided on the enclosed proxy card. If you are voting by telephone or through the internet, then your voting instructions must be received by 11:59 p.m., Eastern Time on June 29, 2021. Your proxy is being solicited by the Board.

If you have any questions about the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card, please contact us by mail at 42201 Nobel Drive, Fremont, California or by telephone at (510) 656-3333.

If you fail to return your proxy, vote by telephone or through the internet or attend the special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the Merger Agreement Proposal, the Authorized Share Charter Amendment Proposal and the Corporate Opportunity Charter Amendment Proposal, but will have no effect on the approval of the Share Issuance Proposal or the Adjournment Proposal.

 

  

By Order of the Board of Directors,

 

Simon Y. Leung

 

Senior Vice President, General Counsel and Corporate Secretary

 

June 9, 2021

Fremont, California

  

Please Vote—Your Vote is Important


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TABLE OF CONTENTS

 

SUMMARY TERM SHEET

     1  

The Parties

     1  

The Special Meeting

     2  

The Merger

     2  

Stockholders Entitled to Vote

     2  

How to Vote

     2  

Recommendation of the Board; Reasons for Recommendation

     3  

Voting Agreement

     3  

Investor Rights Agreement

     3  

Opinion of Duff & Phelps

     4  

Certain Effects of the Merger

     4  

Consequences if the Merger is Not Completed

     4  

Interests of Directors and Executive Officers in the Merger

     5  

Regulatory Approvals

     5  

Conditions to the Merger

     5  

Financing

     5  

No Solicitation

     7  

Termination of the Merger Agreement

     8  

Termination Fees

     8  

Additional Information

     9  

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

     10  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     18  

RISK FACTORS

     20  

Risks Relating to the Merger

     20  

Risks Relating to the Combined Company

     25  

Risks Relating to Tech Data

     27  

Risks Relating to SYNNEX

     33  

PARTIES TO THE MERGER

     34  

SYNNEX Corporation

     34  

Tiger Parent (AP) Corporation

     34  

Spire Sub I, Inc.

     34  

Spire Sub II, LLC

     35  

THE SPECIAL MEETING

     36  

Date, Time and Place of the Special Meeting

     36  

Purpose of the Special Meeting

     36  

Recommendation of the Board

     36  

Record Date and Quorum

     37  

Vote Required for Approval

     37  

Effect of Abstentions; Broker Non-Votes

     38  

How to Vote

     39  

Revocation of Proxies

     39  

Adjournments and Postponements

     40  

Solicitation of Proxies

     40  

Technical Support

     40  

Questions and Additional Information

     40  

PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

     41  

PROPOSAL 2: SHARE ISSUANCE PROPOSAL

     42  

PROPOSAL 3: AUTHORIZED SHARE CHARTER AMENDMENT PROPOSAL

     43  

PROPOSAL 4: CORPORATE OPPORTUNITY CHARTER AMENDMENT PROPOSAL

     44  

PROPOSAL 5: ADJOURNMENT PROPOSAL

     45  

 

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THE MERGER

     46  

Overview

     46  

Background of the Merger

     46  

Recommendation of the Board

     55  

Reasons for Recommending the Adoption of the Merger and the Merger Agreement

     55  

Certain SYNNEX Projections

     59  

Opinion of Duff & Phelps, LLC

     64  

Interests of Directors and Executive Officers in the Merger

     73  

Certain Effects of the Merger

     73  

Consequences if the Merger is Not Completed

     74  

Financing

     74  

Regulatory Approvals

     76  

THE MERGER AGREEMENT

     78  

Structure of the Merger

     78  

Merger Consideration

     79  

Closing

     79  

Effective Time

     79  

Conversion of Shares; Exchange of Certificates

     79  

Conditions to the Merger

     79  

Termination of the Merger Agreement

     82  

Effect of Termination

     83  

Termination Fees

     83  

Covenants and Agreements

     84  

Representations and Warranties

     94  

Material Adverse Effect

     96  

Amendment

     96  

Applicable Law; Jurisdiction

     97  

Expenses

     97  

VOTING AGREEMENT

     98  

Agreement to Not Transfer Shares; No Inconsistent Arrangements

     98  

Agreement to Vote the Covered Shares

     98  

Representations and Warranties

     99  

Applicable Law; Jurisdiction

     99  

Termination

     99  

INVESTOR RIGHTS AGREEMENT

     100  

Board of Directors

     100  

Directors’ and Officers’ Insurance

     101  

Certain Actions Requiring Approvals

     101  

Restricted Activities; Voting

     101  

Registration Rights

     101  

Applicable Law; Jurisdiction

     102  

SYNNEX UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     103  

DESCRIPTION OF TECH DATA BUSINESS

     117  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF TIGER PARENT

     119  

Forward-Looking Statements

     119  

Overview

     119  

Non-GAAP Financial Measures

     120  

Results of Operations

     122  

Net Sales

     123  

2021 - 2020 Net Sales Commentary

     124  

2020 - 2019 Net Sales Commentary

     125  

 

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Gross Profit

     126  

Operating Expenses

     127  

Acquisition, Integration and Restructuring Expenses

     128  

Adjusted EBITDA

     132  

Consolidated Results—EBITDA

     132  

Americas—EBITDA

     134  

Europe—EBITDA

     136  

Asia-Pacific—EBITDA

     138  

Interest Expense

     139  

Other Expense, Net

     140  

Provision for Income Taxes

     140  

Liquidity And Capital Resources

     142  

Off-Balance Sheet Arrangements

     145  

Critical Accounting Policies And Estimates

     145  

Recent Accounting Pronouncements

     146  

STOCK OWNERSHIP

     147  

OTHER MATTERS

     149  

Other Matters for Action at the Special Meeting

     149  

FUTURE STOCKHOLDER PROPOSALS

     150  

HOUSEHOLDING OF PROXY MATERIAL

     151  

WHERE YOU CAN FIND MORE INFORMATION

     152  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF TIGER PARENT

     153  

Report of Independent Auditors

     153  

Annex A—Merger Agreement

     A-1  

Annex B—Amendment to SYNNEX Certificate of Incorporation to Increase the Number of Authorized Shares

     B-1  

Annex C—Amendment to SYNNEX Certificate of Incorporation to Waive the Corporate Opportunity Doctrine

     C-1  

Annex D—Voting Agreement

     D-1  

Annex E—Investor Rights Agreement

     E-1  

Annex F—Opinion of Duff & Phelps, LLC

     F-1  

Annex G—Complaint filed by Joel Zalvin on May 26, 2021 in the Superior Court of California, County of San Luis Obispo

     G-1  

Annex H—Complaint filed by Patrick Akowuah on May 27, 2021 in the United States District Court for the Southern District of New York

     H-1  

Annex I—Complaint filed by Walter Voegtlin on June 4, 2021 in the United States District Court for the Eastern District of New York

     I-1  

 

 

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SUMMARY TERM SHEET

This summary highlights certain information in this proxy statement but may not contain all of the information that may be important to you. You should carefully read the entire proxy statement and the attached Annexes and the other documents to which this proxy statement refers you for a more complete understanding of the matters being considered at the special meeting. In addition, this proxy statement incorporates by reference important business and financial information about SYNNEX Corporation. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section entitled “Where You Can Find More Information.” Unless the context otherwise indicates, we refer to SYNNEX Corporation as “SYNNEX,” “we,” “us” or “our.”

The Parties

SYNNEX Corporation

SYNNEX, a Delaware corporation, is a Fortune 200 corporation and a leading provider of a comprehensive range of distribution, systems design, and integration services for the technology industry to a wide range of enterprises. Founded in 1980, SYNNEX Corporation operates in numerous countries throughout North and South America, Asia-Pacific, and Europe.

SYNNEX’ principal executive offices are located at 44201 Nobel Drive, Fremont, California 94538, and its telephone number is (510) 656-3333.

Tiger Parent (AP) Corporation

Tiger Parent (AP) Corporation, a Delaware corporation, is the indirect parent of Tech Data Corporation, a Florida corporation. Tech Data’s end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow, and advance. Tech Data is ranked No. 90 on the Fortune 500 and has been named one of Fortune’s World’s Most Admired Companies for 11 straight years.

Tiger Parent’s principal executive offices are located at c/o Tech Data Corporation, 5350 Tech Data Drive, Clearwater, Florida 33760 and its telephone number is (727) 539-7429.

Spire Sub I, Inc.

Spire Sub I, Inc., a direct wholly owned subsidiary of SYNNEX, is a Delaware corporation incorporated for the purpose of effecting the Merger. Spire Sub I, Inc. has not conducted any activities other than those incidental to its incorporation and the matters contemplated by the Merger Agreement, including the preparation of applicable regulatory filings in connection with the Merger. The principal executive offices of Spire Sub I, Inc. are located at c/o SYNNEX Corporation, 44201 Nobel Drive, Fremont, California 94538 and its telephone number is (510) 656-3333.

Spire Sub II, LLC

Spire Sub II, LLC, a direct wholly owned subsidiary of SYNNEX, is a Delaware limited liability company formed for the purpose of effecting the Merger. Spire Sub II, LLC has not conducted any activities other than those incidental to its formation and the matters contemplated by the Merger Agreement, including the preparation of applicable regulatory filings in connection with the Merger. The principal executive offices of Spire Sub II, LLC are located at c/o SYNNEX Corporation, 44201 Nobel Drive, Fremont, California 94538 and its telephone number is (510) 656-3333.



 

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The Special Meeting (see page 36)

A special meeting of our stockholders will be held via live webcast on June 30, 2021, at 10:00 a.m., Pacific Time. You will be able to attend the special meeting by first registering at https://viewproxy.com/synnex/2021sm/htype.asp The registration deadline for the virtual meeting is June 27, 2021 at 11:59 p.m., Eastern Time. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Stockholders will be able to listen, vote, and submit questions during the virtual meeting. Please note that you will not be able to attend the virtual special meeting in person. At the special meeting, you will be asked to vote for the Merger Agreement Proposal, the Share Issuance Proposal, the Authorized Share Charter Amendment Proposal, the Corporate Opportunity Charter Amendment Proposal and the Adjournment Proposal. See the section entitled “The Special Meeting” for additional information on the special meeting, including how to vote your shares of SYNNEX common stock.

The Merger (see page 46)

SYNNEX will acquire Tiger Parent through a two-step merger, subject to approval of SYNNEX’ stockholders and the satisfaction or (to the extent permitted by law) waiver of certain other closing conditions. Merger Sub I will merge with and into Tiger Parent, with Tiger Parent surviving the merger and becoming a wholly owned subsidiary of SYNNEX. Immediately following the Corporate Merger, Tiger Parent will merge with and into Merger Sub II, with Merger Sub II surviving the LLC Merger as a wholly owned subsidiary of SYNNEX. The Merger is intended to be considered together as a single integrated transaction for U.S. federal income tax purposes and to qualify as a “reorganization” within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (which we refer to as the “Code”).

Stockholders Entitled to Vote (see page 37)

You may vote at the special meeting if you were a holder of record of shares of SYNNEX common stock as of the close of business on June 8, 2021, which is the record date for the special meeting (which we refer to as the “record date”). You will be entitled to one vote for each share of SYNNEX common stock that you owned on the record date. As of the record date, there were 51,921,692 shares of SYNNEX common stock issued and outstanding and entitled to vote at the special meeting.

How to Vote (see page 39)

Stockholders of record have a choice of voting (i) by following the Internet voting instructions described in the proxy card, (ii) by following the telephone voting instructions described in the proxy card, (iii) by completing, dating, signing and returning a proxy card in the accompanying postage-prepaid return envelope or (iv) at the special meeting by first registering at https://viewproxy.com/synnex/2021sm/htype.asp. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Stockholders will be able to listen, vote and submit questions during the virtual meeting. The telephone and internet voting facilities for stockholders of record will close at 11:59 p.m., Eastern Time on June 29, 2021.

If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the special meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the special meeting (but will not be able to vote your shares) so long as you demonstrate proof of stock ownership. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at https://viewproxy.com/synnex/2021sm/htype.asp. On the day of the annual meeting, you may only vote during the meeting by e-mailing a copy of your legal proxy to virtualmeeting@viewproxy.com in advance of the meeting.

For additional information regarding the procedure for delivering your proxy, see the sections entitled “The Special Meeting—How to Vote” and “The Special Meeting—Solicitation of Proxies.”



 

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Recommendation of the Board; Reasons for Recommendation (see page 55)

After careful consideration, SYNNEX’ board of directors (which we refer to as the “Board”) unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger and the Merger, are fair to, and in the best interests of, SYNNEX and SYNNEX’ stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, (iii) directed that the Merger Agreement, issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation be submitted to SYNNEX’ stockholders for their approval, and (iv) resolved to recommend that the stockholders of SYNNEX adopt the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation on the terms and subject to the conditions set forth in the Merger Agreement.

Accordingly, the Board unanimously recommends that you vote “FOR” the proposal to adopt the Merger Agreement, “FOR” the proposal to approve the issuance of shares of SYNNEX common stock in connection with the Merger, “FOR” the proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to increase the number of authorized shares of SYNNEX common stock, “FOR” the proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to waive the corporate opportunity doctrine with respect to certain directors and certain other parties, and “FOR the proposal to adjourn the special meeting if necessary or appropriate, including to solicit additional proxies.

For a discussion of the material factors considered by the Board in reaching its conclusions, see the section entitled “The Merger— Reasons for Recommending the Adoption of the Merger and the Merger Agreement.” In addition, with respect to the Merger Agreement, you should be aware that our directors and executive officers have interests that may be different from, or in addition to, the interests of SYNNEX’ stockholders generally. See the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger.”

Voting Agreement (see page 98 and Annex D)

In connection with the execution of the Merger Agreement, on March 22, 2021, SYNNEX and Tiger Parent entered into a Voting Agreement (which we refer to as the “Voting Agreement”) with Silver Star Developments Ltd. and Peer Developments Ltd. (which we refer to collectively as “Major Stockholders”), who collectively owned approximately 17% of the total issued and outstanding shares of SYNNEX common stock as of such date. Pursuant to the Voting Agreement, the Major Stockholders have agreed to vote, or cause the holder of record to vote, in favor of the Share Issuance Proposal, the Authorized Share Charter Amendment Proposal, the Corporate Opportunity Charter Amendment Proposal and any other matters brought to vote at the special meeting (which will include, in this case, the Merger Agreement Proposal and the Adjournment Proposal).

Investor Rights Agreement (see page 100 and Annex E)

In connection with, and as a condition to, closing and the consummation of the closing of the Merger, SYNNEX will enter into an Investor Rights Agreement (which we refer to as the “Investor Rights Agreement”) with Tiger Holdings, the sole stockholder of Tiger Parent and an affiliate of Apollo. The Investor Rights Agreement, among other things, provides that following the closing, the Board shall be comprised of 11 directors, and Tiger Holdings shall have the right to nominate a certain number of directors, depending on the percentage of the outstanding shares of SYNNEX common stock held by Tiger Holdings or certain of its affiliates. The Investors Rights Agreement also contains registration rights for Tiger Holdings.



 

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Opinion of Duff & Phelps (see page 64 and Annex F)

In connection with the Merger, SYNNEX retained Duff & Phelps, LLC (which we refer to as “Duff & Phelps”) to serve as an independent financial advisor to the Board (solely in their capacity as members of the Board) specifically to provide to the Board a fairness opinion in connection with the acquisition by SYNNEX of Tech Data for consideration paid to Tech Data’s stockholder consisting of $1.61 billion in cash and 44.0 million shares of SYNNEX common stock. On March 16, 2021, Duff & Phelps delivered its opinion, dated March 16, 2021 (which we refer to as the “Opinion”), to the Board that, as of the date of the Opinion and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in such Opinion, the consideration to be paid by SYNNEX in the Merger was fair, from a financial point of view, to SYNNEX and its stockholders (without giving effect to any impact of the proposed Merger on any particular stockholder other than in its capacity as a stockholder).

The full text of the Opinion is attached hereto as Annex F and is incorporated into this document by reference. The summary of the Opinion set forth herein is qualified in its entirety by reference to the full text of the Opinion. The Opinion should be read carefully and in its entirety for a discussion of the procedures followed, assumptions made, other matters considered and limits of the review undertaken by Duff & Phelps in connection with such Opinion, as well as the qualifications contained therein.

As compensation for Duff & Phelps’ services in connection with the rendering of its opinion to the Board, SYNNEX agreed to pay Duff & Phelps a fee of $600,000. The fee was payable upon Duff & Phelps informing the Board that it was prepared to deliver its opinion. No portion of Duff & Phelps’ fee is refundable or contingent upon the completion of the Merger or the conclusion reached in its opinion.

For additional information, see the section entitled “The Merger—Opinion of Duff & Phelps, LLC” and Annex F to this proxy statement.

Certain Effects of the Merger (see page 73)

Upon completion of the Merger, Merger Sub I will merge with and into Tiger Parent, with Tiger Parent surviving the Corporate Merger and becoming a wholly owned subsidiary of SYNNEX. Immediately following the Corporate Merger, Tiger Parent will merge with and into Merger Sub II, with Merger Sub II surviving the LLC Merger as a wholly owned subsidiary of SYNNEX upon the terms set forth in the Merger Agreement.

If the Merger is completed, the aggregate consideration for the Merger in exchange for all the issued and outstanding Tiger Parent common shares will consist of (i) $1.61 billion in cash ($1.1 billion in cash after giving effect to the $500 million equity contribution by Tiger Holdings to Tiger Parent prior to the Effective Time) and (ii) 44 million shares of SYNNEX common stock.

Consequences if the Merger is Not Completed (see page 74)

If the Share Issuance Proposal and the Authorized Share Charter Amendment Proposal are not approved by the holders of shares of SYNNEX common stock or if the Merger is not completed for any other reason, the Merger Agreement will be void and have no effect, and there will not be any liability or obligation on the part of any party, except that:

 

   

no termination will relieve any party from liability for any material breach or failure to perform that is the consequence of an act or omission of such party with the knowledge that such act or omission would cause a material breach of the Merger Agreement (a “Willful Breach”);

 

   

no termination will affect the obligations of the parties contained in the confidentiality agreement between them; and



 

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certain other provisions of the Merger Agreement, including provisions with respect to the allocation of fees and expenses, including, if applicable, the termination fees described below, will survive such termination.

If the Merger Agreement is terminated under specified circumstances, SYNNEX is required to pay Tiger Parent a termination fee of either $131,683,200, $86,275,200 or $40,867,200, and in the event the Merger Agreement is terminated because the approval of SYNNEX’ stockholders shall not have been obtained, SYNNEX is required to reimburse Tiger Parent for their reasonable fees, costs and other expenses directly related to the Merger. For additional information, see the section entitled “The Merger Agreement—Termination Fees.”

Interests of Directors and Executive Officers in the Merger (see page 73)

With respect to the Merger Agreement, you should be aware that our directors and executive officers have interests that may be different from, or in addition to, the interests of SYNNEX’ stockholders generally. The Board was aware of these interests and considered them at the time it approved the Merger Agreement.

Regulatory Approvals (see page 76)

Under the Merger Agreement, the respective obligations of SYNNEX and Tiger Parent to complete the Merger are subject to, among other things, (i) the expiration or termination of the waiting period (and any extension thereof, including any agreement between a party to the Merger Agreement and a governmental authority agreeing not to consummate the Merger prior to a certain date) applicable to the completion of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (which we refer to as the “HSR Act”) (together, such expiration or termination we refer to as the “HSR Act Clearance”) and (ii) the making of and receipt of, certain other specified regulatory filings and consents (which we refer to as the “required filings” and “required consents”).

On April 2, 2021, SYNNEX and Tiger Parent filed their respective notification and report forms under the HSR Act with respect to the Merger with the FTC and DOJ, which triggered the start of the HSR Act waiting period. At the end of the initial 30-day waiting period, SYNNEX pulled and re-filed its notification and report form under the HSR Act, with the consent of Tiger Parent, to allow the FTC and DOJ an additional 30 days to review the Merger. This additional 30-day period expired on June 4, 2021. Additionally, the Merger has received clearance for some of the non-U.S. regulatory filings, while other non-U.S. regulatory clearances remain outstanding.

For a description of SYNNEX’ and Tiger Parent’s respective obligations under the Merger Agreement with respect to regulatory approvals, see the section entitled “The Merger Agreement—Covenants and Agreements—Efforts to Complete the Merger.”

Conditions to the Merger (see page 79)

The obligations of each of SYNNEX, Merger Sub I, Merger Sub II and Tiger Parent to complete the Merger are subject to satisfaction of various conditions, including (i) the approval of SYNNEX’ stockholders shall have been obtained, (ii) the SYNNEX common stock issuable as Merger Consideration will have been authorized for listing on the NYSE, (iii) the HSR Act Clearance and other required regulatory approvals will have been obtained, and (iv) no law, order, injunction or decree will be in effect that prevents, makes illegal or prohibits the Merger.

For additional information, see the section entitled “The Merger Agreement—Conditions to the Merger.”

Financing (see page 74)

SYNNEX anticipates that the total amount of funds necessary to directly or indirectly pay, repay, refinance, or repurchase, as applicable, certain existing of its and Tech Data’s indebtedness (including indebtedness of their



 

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respective subsidiaries) will be approximately $1,185 million. These amounts will be funded through some or all of (i) the term loan portion of the takeout facility (defined below), (ii) cash on hand and (iii) the proceeds that SYNNEX intends to obtain from other financings or offerings of debt securities in lieu of borrowing under the Tranche C of the Bridge Facility (as defined below). Remaining amounts under the takeout facility will be used for general corporate purposes.

To provide the debt financing required by SYNNEX to consummate the Merger, SYNNEX entered into:

(1) a commitment letter dated March 22, 2021 (which, as it may be amended from time to time, we refer to as the “Bridge Commitment Letter”), under which Citigroup Global Markets Inc. (which we refer to as “Citi”) and certain other financing institutions joining thereto pursuant to the terms thereof committed to provide $4.0 billion in aggregate principal amount of senior unsecured term bridge loans and $3.5 billion in aggregate principal amount of senior unsecured revolving credit commitments, the availability of which was and is subject to reduction upon the consummation of the Permanent Financing (as defined below) pursuant to the terms set forth in the Bridge Commitment Letter (which we refer to as the “Bridge Facility”). The Bridge Facility originally consisted of three different tranches of senior unsecured loans: the first tranche (which we refer to as “Tranche A”) was for a $1.5 billion senior unsecured term loan; the second tranche (which we refer to as “Tranche B”) was for a $3.5 billion senior unsecured revolving credit facility; and the third tranche (which we refer to as “Tranche C”) is for a $2.5 billion senior unsecured term loan. On April 16, 2021, SYNNEX entered into the takeout facility and pursuant to the terms of the Bridge Commitment Letter, the commitments with respect to Tranche A and Tranche B of the Bridge Facility were reduced to zero. As a result of the termination of both Tranche A and Tranche B of the Bridge Facility, only Tranche C of the Bridge Facility remains outstanding and the debt financing that was previously committed to under Tranche A and Tranche B of the Bridge Facility will instead be provided under the takeout facility; and

(2) a credit agreement dated April 16, 2021, the loans and commitments to be provided thereunder (which we collectively refer to as the “takeout facility”) and the related underlying documentation in respect thereof (which we refer to as the “New Credit Agreement”), with Citibank, N.A., as agent, and the other lenders party thereto, pursuant to which SYNNEX has received commitments for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $3.5 billion, which revolving credit facility may, subject to the lenders’ discretion, potentially be increased by up to an aggregate amount of $500 million and for the extension of a senior unsecured term loan in an aggregate principal amount not to exceed $1.5 billion. The commitments under the takeout facility are subject to customary closing conditions. The borrower under the takeout facility is SYNNEX.

At this time, SYNNEX has not yet determined whether Tranche C of the Bridge Facility will be required to be utilized in conjunction with the takeout facility to provide the debt financing required to refinance certain indebtedness required to consummate the proposed transactions because such determination will be dependent on future market conditions. SYNNEX intends to obtain additional financing or issue debt securities in lieu of utilizing Tranche C of the Bridge Facility; however, there is no assurance that such alternative arrangements will be available on acceptable terms or at all. If Tranche C of the Bridge Facility is utilized there can be no assurance that any replacement or supplemental financing in lieu of or to refinance Tranche C of the Bridge Facility will be available to SYNNEX on acceptable terms or at all. SYNNEX’ ability to obtain additional debt financing, including financing to refinance, replace or supplement Tranche C of the Bridge Facility, will be subject to various factors, including market conditions and operating performance.

The funding under either the Bridge Commitment Letter or the takeout facility, as applicable, is subject to customary closing conditions, including conditions that do not relate directly to the conditions to closing in the Merger Agreement.

Until the earlier of the closing or the valid termination of the Merger Agreement in accordance therewith, SYNNEX has agreed to use its reasonable best efforts to take, or cause to be taken, all actions necessary,



 

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advisable and proper in connection with the arrangement, marketing and consummation of the issuance of any debt securities and/or the incurrence of any other long-term debt financing by SYNNEX that is reasonably acceptable to SYNNEX and Tiger Parent in lieu of the Financing (which debt securities and/or other long-term debt financing we refer to herein as the “Permanent Financing”). Furthermore, in the event any funds required to satisfy the transaction uses become unavailable on the terms and conditions contemplated in the Commitment Letter (defined below) or the financing agreements, SYNNEX has agreed to use reasonable best efforts to obtain additional funds (which we refer to as the “Alternative Financing”) in an amount sufficient to allow it to satisfy the transaction uses, and to obtain a new financing commitment that provides for such funds on terms and conditions reasonably acceptable to SYNNEX and Tiger Parent (which we refer to as the “Alternative Commitment Letter”, and together with the Bridge Commitment Letter, as the context may require, the “Commitment Letter”). The debt financing contemplated by the Commitment Letter is referred to herein as the “Financing”.

For more information, see the section entitled “The Merger Agreement—Financing.”

No Solicitation (see page 87)

As more fully described in this proxy statement and in the Merger Agreement, each of SYNNEX and Tiger Parent mutually agreed to immediately cease discussions or negotiations with any other person that may have been ongoing prior to the date of the Merger Agreement, with respect to any alternative acquisition proposal of SYNNEX or Tiger Parent, as applicable, and to request the return or destruction of any confidential information previously delivered to any such person.

Each of SYNNEX and Tiger Parent has agreed that it will not, and will cause each of its subsidiaries and other respective representatives not to, directly or indirectly:

 

   

initiate, solicit, knowingly encourage or knowingly facilitate any inquiries or proposals with respect to any alternative acquisition proposal;

 

   

engage or participate in any negotiations with any person concerning any alternative acquisition proposal;

 

   

provide any confidential or nonpublic information or data to, or have or participate in any discussions with any person relating to any alternative acquisition proposal; or

 

   

approve or enter into any acquisition agreement, term sheet, letter of intent, memorandum of understanding or other similar agreement in connection with or relating to any alternative acquisition proposal (unless the Merger Agreement has been terminated).

If, prior to the receipt of SYNNEX’ stockholder approval, SYNNEX receives a bona fide written alternative acquisition proposal not solicited in violation of its non-solicitation obligations under the Merger Agreement, SYNNEX may furnish confidential or nonpublic information to, and participate in such negotiations or discussions with, the person making the alternative acquisition proposal, if the Board concludes in good faith, after consulting with such outside advisors as it determines in good faith to be reasonably necessary, that taking such actions would be required to comply with its fiduciary duties. Before furnishing any confidential or nonpublic information, SYNNEX shall enter into a confidentiality agreement with the person making such alternative acquisition proposal that contains terms substantially no less favorable than the confidentiality agreement between SYNNEX and Tiger Parent (provided that such confidentiality agreement shall not give such person with any exclusive right to negotiate with SYNNEX, and shall otherwise permit SYNNEX to comply with its obligations under the Merger Agreement).

For additional information, see the section entitled “The Merger Agreement—Covenants and Agreements—No Solicitation.”



 

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Termination of the Merger Agreement (see page 82)

The Merger Agreement may be terminated at any time prior to the effective time of the Corporate Merger by mutual written agreement of SYNNEX and Tiger Parent. The Merger Agreement may also be terminated by either SYNNEX or Tiger Parent if:

 

   

any legal restraint, including the denial of any required regulatory approval, is in effect that has become final and nonappealable, except that no party may terminate the Merger Agreement as described in this bullet point if the existence of such legal restraint was principally caused by such party’s failure to perform or observe any of its obligations, covenants or agreements under the Merger Agreement;

 

   

the Merger has not occurred on or before 11:59 p.m. on the outside date of December 22, 2021, except that, if on the outside date, all of the closing conditions described under “—Conditions to the Merger” have been satisfied or duly waived by all parties entitled to the benefit thereof except for closing conditions regarding the existence of a legal restraint or HSR Act Clearance or a required regulatory approval, a party may extend the outside date to March 22, 2022, and if such circumstances continue to exist on such extended outside date, a party may then further extend the outside date to June 22, 2022, except that no party may extend the outside date as described in this bullet point if the failure of the Merger to occur on or by the outside date was principally caused by such party’s failure to perform or observe any of its obligations, covenants or agreements under the Merger Agreement;

 

   

if the other party has breached any of the obligations, covenants or agreements, or representations or warranties of the other party, such that if that breach was in effect as of the closing, the other party would not be able to satisfy it closing conditions described under “—Conditions to the Merger” and the other party has not cured such breach within 30 days after receiving written notice of the breach from the terminating party, except that no party may terminate the Merger Agreement as described in this bullet point if it is then in material breach of any of its obligations, covenants or other agreements under the Merger Agreement; or

 

   

SYNNEX’ stockholders fail to approve the Share Issuance Proposal and the Authorized Share Charter Amendment at the special meeting or at any adjournment or postponement thereof at which a vote on such proposals and matters is taken.

The Merger Agreement may be terminated by Tiger Parent at any time prior to receipt of SYNNEX’ stockholder approval, if SYNNEX has made a change of recommendation as described under the section entitled “The Merger Agreement—Covenants and Agreements—Change of Recommendation;” or SYNNEX has committed a Willful Breach of certain of its non-solicitation obligations.

The Merger Agreement may be terminated by SYNNEX, at any time prior to obtaining SYNNEX’ stockholder approval, in order to accept a superior acquisition proposal in accordance with, and subject to the terms and conditions of, the provisions described under “The Merger Agreement—Covenants and Agreements—No Solicitation; —Change of Recommendation.”

Termination Fees (see page 83)

Upon termination of the Merger Agreement under specified circumstances, SYNNEX must pay Tiger Parent a termination fee or reimburse Tiger Parent for its reasonable fees, costs and other expenses directly related to the Merger. These payments are Tiger Parent’s sole and exclusive remedy, except in the case of a Willful Breach, for any claims arising out of the Merger Agreement together with any costs and expenses incurred by Tiger Parent in enforcing payment of such termination fee. In no event will SYNNEX be required to pay to Tiger Parent more than one termination fee. For additional information, see the section entitled “The Merger Agreement—Termination Fees.”



 

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Additional Information (see page 152)

You can find more information about SYNNEX in the periodic reports and other information SYNNEX files with the U.S. Securities and Exchange Commission (which we refer to as the “SEC”). The information is available at the SEC’s public reference facilities and at the website maintained by the SEC at www.sec.gov.



 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to briefly address some commonly asked questions regarding the special meeting of stockholders and the Merger. These questions and answers do not address all questions that may be important to you as a stockholder of SYNNEX. Please refer to the more detailed information contained elsewhere in this proxy statement, the Annexes to this proxy statement and the documents referred to in this proxy statement.

 

Q:

What is the Merger?

 

A:

On March 22, 2021, SYNNEX entered into the Merger Agreement with Tiger Parent, Merger Sub I, and Merger Sub II. A copy of the Merger Agreement is attached as Annex A to this proxy statement. The Merger Agreement contains the terms and conditions of the proposed acquisition of Tiger Parent by SYNNEX. Under the Merger Agreement, subject to satisfaction or (to the extent permitted by law) waiver of the conditions set forth in the Merger Agreement and described hereinafter, Merger Sub I will merge with and into Tiger Parent, with Tiger Parent surviving the Corporate Merger. Promptly following the Corporate Merger, Tiger Parent will merge with and into Merger Sub II, with Merger Sub II surviving the LLC Merger as a wholly owned subsidiary of SYNNEX. Such Corporate Merger and LLC Merger are referred to collectively as the “Merger”. The Merger is intended to be considered together as a single integrated transaction for U.S. federal income tax purposes and to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

 

Q:

Why am I receiving this proxy statement?

 

A:

You are receiving this proxy statement in connection with the solicitation of proxies by the Board with respect to the Merger and other matters to be considered at the special meeting. These materials will help you decide how to vote your shares of common stock with respect to the matters related to the Merger to be considered at the special meeting.

SYNNEX is holding a virtual special meeting of its stockholders to vote on the proposals necessary to complete the Merger. Information about the special meeting, the Merger, the Merger Agreement and the other business to be considered by stockholders at the special meeting is contained in this proxy statement.

 

Q:

What will Tiger Parent’s stockholder receive in the Merger?

 

A:

If the Merger is completed, Tiger Holdings, as sole holder of shares of Tiger Parent’s common stock, will be entitled to receive $1.61 billion in cash ($1.11 billion in cash after giving effect to the $500 million equity contribution by Tiger Holdings to Tiger Parent prior to the Effective Time) and 44 million shares of SYNNEX common stock. Following the completion of the Merger, SYNNEX’ stockholders prior to the Merger will hold approximately 55% of outstanding shares of SYNNEX common stock, and Tiger Holdings will hold approximately 45% of outstanding shares of SYNNEX common stock. The SYNNEX common stock to be issued in connection with the Merger will not be registered under the Securities Act and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. SYNNEX is required to, within two business days after the closing of the Merger, file an automatically effective registration statement registering the resale of such shares. For further information, see the section entitled “The Merger Agreement—Merger Consideration.”

 

Q:

How will SYNNEX pay the cash component of the Merger consideration?

 

A:

SYNNEX’ obligation to complete the Merger is not conditioned upon obtaining financing. $1.61 billion, less $500 million equity contributed by Tiger Holdings before closing will be paid from a combination of cash and/or debt raised as part of the debt offering immediately prior to the closing.

 

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Q:

What equity stake will Tiger Parent’s stockholder hold in SYNNEX immediately following the Merger?

 

A:

Upon the completion of the Merger, the number of shares of SYNNEX common stock issuable as a portion of the Merger Consideration will be 44 million shares, which will result in Tiger Holdings, as sole holder of shares of Tiger Parent’s common stock, holding approximately 45% of the outstanding shares of SYNNEX common stock, based on the number of outstanding shares of common stock of SYNNEX as of June 8, 2021.

For more details on the calculation of Merger consideration, see “The Merger Agreement—Merger Consideration.”

 

Q:

When and where will the special meeting of stockholders be held?

 

A:

The special meeting of SYNNEX’ stockholders will be held via live webcast on June 30, 2021, at 10:00 a.m., Pacific Time. In order to attend the meeting, you must register at https://viewproxy.com/synnex/2021sm/htype.asp by 11:59 p.m., Eastern Time on June 27, 2021. On the day of the special meeting, if you have properly registered, you may enter the meeting by clicking on the link provided and the password you received via email in your registration confirmations. SYNNEX’ stockholders will be able to listen, vote and submit questions during the virtual meeting

 

Q:

Who is entitled to vote at the special meeting?

 

A:

Only holders of record of SYNNEX common stock as of the close of business on June 8, 2021, the record date for the special meeting, are entitled to notice of and to vote at the special meeting. You will be entitled to one vote on each of the proposals presented in this proxy statement for each share of SYNNEX common stock that you held as of the close of business on the record date.

 

Q:

What proposals will be considered at the special meeting?

 

A:

At the special meeting, you will be asked to consider and vote on:

 

   

a proposal to adopt the Merger Agreement;

 

   

a proposal to approve the issuance of shares of SYNNEX common stock in connection with the Merger;

 

   

a proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to increase the number of authorized shares;

 

   

a proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to waive the corporate opportunity doctrine with respect to certain directors and certain other parties; and

 

   

a proposal to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies.

 

Q:

What vote is required to approve each of the proposals?

 

A:

For the proposal to adopt the Merger Agreement, the Board is requesting the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock (meaning that of the outstanding shares of common stock, a majority of them be voted “for” the proposal). Abstentions and failure to vote will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement.

The proposal to approve an issuance of an aggregate of 44 million shares of SYNNEX common stock in connection with the Merger requires, assuming a quorum is present, the affirmative vote of a majority of shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, and entitled to vote on such matter (meaning that of the shares represented at the

 

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meeting and entitled to vote, a majority of them must be voted “for” the proposal for it to be approved). Abstentions will have the same effect as a vote “AGAINST” the Share Issuance Proposal, but a failure to vote or otherwise be present at the special meeting will have no effect on the Share Issuance Proposal, assuming a quorum is present.

The proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to increase the number of authorized shares requires the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock (meaning that of the outstanding shares of common stock, a majority of them must be voted “for” the proposal for it to be approved). Abstentions and failure to vote will have the same effect as a vote “AGAINST” the Authorized Share Charter Amendment Proposal.

The proposal to adopt an amendment to the SYNNEX Certificate of Incorporation, pursuant to which SYNNEX shall waive the corporate opportunity doctrine with respect to certain directors and certain other parties requires the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock (meaning that of the outstanding shares of common stock, a majority of them must be voted “for” the proposal for it to be approved). Abstentions and failure to vote will have the same effect as a vote “AGAINST” the Corporate Opportunity Charter Amendment Proposal.

The proposal to approve an adjournment to the special meeting if necessary or appropriate requires the affirmative vote of a majority of shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, and entitled to vote on such matter. In addition, even if a quorum is not present at the special meeting, the affirmative vote of shares representing a majority of the shares of SYNNEX common stock present, whether via the virtual meeting website or represented by proxy, and entitled to vote on such matter may adjourn the special meeting to a later date and time. Abstentions will have the same effect as a vote “AGAINST” the Adjournment Proposal, but a failure to vote or otherwise be present at the special meeting will have no effect on the Adjournment Proposal.

 

Q:

How does the Board recommend that I vote on the proposals?

 

A:

After careful consideration, the Board has unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock and the Merger, are fair to, and in the best interests of, SYNNEX and SYNNEX’ stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, (iii) directed that the Merger Agreement, issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation be submitted to SYNNEX’ stockholders for their approval, and (iv) resolved to recommend that the stockholders of SYNNEX adopt the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation on the terms and subject to the conditions set forth in the Merger Agreement.

The Board unanimously recommends that you vote “FOR” the Merger Agreement Proposal, “FOR” the Share Issuance Proposal, FOR the Authorized Share Charter Amendment Proposal, FOR the Corporate Opportunity Charter Amendment Proposal, and “FOR” the Adjournment Proposal.

For a discussion of the material factors considered by the Board in reaching its conclusions, see the section entitled “The Merger—Reasons for Recommending the Adoption of the Merger Agreement.” In addition, with respect to the Merger Agreement, you should be aware that our directors and executive officers have interests that may be different from, or in addition to, the interests of SYNNEX’ stockholders generally. See the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger.”

 

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Q:

Do I need to attend the special meeting?

 

A:

No. It is not necessary for you to attend the special meeting in order to vote your shares. If you are a stockholder of record as of the record date, you may vote by mail, by telephone or through the internet, as described in more detail below. If you are a “street name” holder of shares, you must follow the voting instructions provided to you by your bank, broker, trust or other nominee for your shares to be voted at the special meeting, as described in more detail below.

 

Q:

How many shares of SYNNEX common stock need to be represented at the special meeting?

 

A:

The presence at the special meeting, by attendance via the virtual meeting website or by proxy, of the holders of shares of SYNNEX common stock representing a majority of the votes which all holders of shares of SYNNEX common stock are entitled to cast constitutes a quorum for the purpose of considering the proposals. As of June 8, 2021, there were 51,921,692 shares of SYNNEX common stock outstanding. If you are a stockholder of SYNNEX as of the close of business on the record date and you vote by mail, by telephone, through the internet or at the special meeting via the virtual meeting website, you will be considered part of the quorum. If you are a “street name” holder of shares of SYNNEX common stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. If you are a “street name” holder of shares of SYNNEX common stock and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.

All shares of SYNNEX common stock held by stockholders that attend the special meeting via the virtual meeting website, or are represented by proxy, and entitled to vote at the special meeting, regardless of how such shares are voted or whether such stockholders have indicated on their proxy that they are abstaining from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned.

 

Q:

What will happen if SYNNEX’ stockholders do not approve the Share Issuance Proposal?

 

A:

SYNNEX is proposing the Share Issuance Proposal in order to comply with NYSE Listing Rule 312.03, which requires stockholder approval of certain transactions that result in the issuance of 20% or more of the outstanding voting power before the issuance of stock or securities. If the Share Issuance Proposal is not approved, the Merger cannot be completed, which may have an adverse effect on SYNNEX’ business and financial condition. Under certain circumstances, if the Merger is not completed, we may be obligated to pay a termination fee.

 

Q:

What will happen if SYNNEX’ stockholders do not approve the amendments to the SYNNEX Certificate of Incorporation?

 

A:

Approval of the Authorized Share Charter Amendment Proposal is a condition to the completion of the Merger. If the Authorized Share Charter Amendment Proposal is not approved, the Merger cannot be completed, which may have an adverse effect on SYNNEX’ business and financial condition. Under certain circumstances, if the Merger is not completed, we may be obligated to pay a termination fee.

Approval of the Corporate Opportunity Charter Amendment Proposal is not a condition to the completion of the Merger. In the event that the Corporate Opportunity Charter Amendment Proposal is not approved, but the Authorized Share Charter Amendment Proposal is approved, the SYNNEX Certificate of Incorporation as in effect immediately prior to the effective time of the Merger, as amended pursuant to the Authorized Share Charter Amendment Proposal, shall constitute the SYNNEX Certificate of Incorporation, until thereafter amended in accordance with its terms and applicable law. Additionally, in the event the Corporation Opportunity Charter Amendment Proposal is not approved, substantially the same provisions to waive the corporate opportunity doctrine with respect to certain directors and certain other parties will be included in the Investor Rights Agreement instead.

 

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Q:

What will happen if SYNNEX’ stockholders do not approve the Merger Agreement Proposal?

Approval of the Merger Agreement Proposal is not a condition to the completion of the Merger, and therefore the failure to obtain such approval will have no effect on the Merger.

 

Q:

What do I need to do now?

 

A:

After carefully reading and considering the information contained in this proxy statement and the Annexes attached to this proxy statement, please vote your shares of SYNNEX common stock in one of the ways described below as soon as possible. You will be entitled to one vote for each share of SYNNEX common stock that you owned on the record date.

 

Q:

How do I vote if I am a stockholder of record?

 

A:

You may vote by:

 

   

submitting your proxy by completing, signing and dating each proxy card you receive and returning it by mail in the enclosed prepaid envelope;

 

   

submitting your proxy by using the telephone number printed on each proxy card you receive;

 

   

submitting your proxy through the internet voting instructions printed on each proxy card you receive; or

 

   

casting your vote at the special meeting by following the instructions that will be available on the virtual meeting website during the meeting. If you are a registered holder, your virtual control number will be on your proxy card. If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the special meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the special meeting (but will not be able to vote your shares) so long as you demonstrate proof of stock ownership.

If you are submitting your proxy by telephone or through the internet, your voting instructions must be received by 11:59 p.m., Eastern Time on June 29, 2021.

Submitting your proxy by mail, by telephone or through the internet will not prevent you from casting your vote at the special meeting via the virtual meeting website. You are encouraged to submit a proxy by mail, by telephone or through the internet even if you plan to attend the special meeting via the virtual meeting website to ensure that your shares of SYNNEX common stock are represented at the special meeting.

If you return your signed proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted “FOR” the Merger Agreement Proposal, “FOR” the Share Issuance Proposal, “FOR” the Authorized Share Charter Amendment Proposal, “FOR” the Corporate Opportunity Charter Amendment Proposal, and “FOR” the Adjournment Proposal.

 

Q:

If my shares are held for me by a bank, broker, trust or other nominee, will my bank, broker, trust or other nominee vote those shares for me with respect to the proposals?

 

A:

Your bank, broker, trust or other nominee will NOT have the power to vote your shares of SYNNEX common stock at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote. You should instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the proposals, using the instructions provided by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the internet if your bank, broker, trust or other nominee offers these options.

 

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Q:

What if I fail to instruct my bank, broker, trust or other nominee how to vote?

 

A:

Brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine” without specific instructions from the beneficial owner. It is expected that all proposals to be voted on at the special meeting are “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power.

If you are a stockholder of SYNNEX and you do not instruct your bank, broker, trust or other nominee on how to vote your shares:

 

   

your bank, broker, trust or other nominee may not vote your shares on the Merger Agreement Proposal, which broker non-votes, if any, will have the same effect as a vote against such proposal;

 

   

your bank, broker, trust or other nominee may not vote your shares on the Share Issuance Proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal (assuming a quorum is present);

 

   

your bank, broker, trust or other nominee may not vote your shares on the Authorized Share Charter Amendment Proposal, which broker non-votes, if any, will have the same effect as a vote against such proposal;

 

   

your bank, broker, trust or other nominee may not vote your shares on the Corporate Opportunity Charter Amendment Proposal, which broker non-votes, if any, will have the same effect as a vote against such proposal; and

 

   

your bank, broker, trust, or other nominee may not vote your shares on the Adjournment Proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal (regardless of whether a quorum is present).

 

Q:

May I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the internet?

 

A:

Yes. You may revoke your proxy or change your vote at any time before it is voted at the special meeting. You may revoke your proxy by delivering a signed written notice of revocation stating that the proxy is revoked and bearing a date later than the date of the proxy delivered to Corporate Secretary, SYNNEX Corporation, 44201 Nobel Drive, Fremont, California 94538. You may also revoke your proxy or change your vote by submitting another proxy by telephone or through the internet in accordance with the instructions on the enclosed proxy card. You may also submit a later-dated proxy card relating to the same shares. If you voted by completing, signing, dating and returning the enclosed proxy card, you should retain a copy of the voter control number found on the proxy card in the event that you later decide to revoke your proxy or change your vote by telephone or through the internet. Alternatively, your proxy may be revoked or changed by attending the special meeting via the virtual meeting website and voting at the meeting. However, simply attending the special meeting without voting will not revoke or change your proxy.

“Street name” holders of shares of SYNNEX common stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies. If you have instructed a bank, broker, trust or other nominee to vote your shares of SYNNEX common stock, you must follow the instructions received from your bank, broker, trust or other nominee to change your vote.

All properly submitted proxies received by us before the special meeting that are not revoked or changed prior to being exercised at the special meeting will be voted at the special meeting in accordance with the instructions indicated on the proxies or, if no instructions were provided, “FOR” each of the proposals.

 

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Q:

What does it mean if I receive more than one proxy card?

 

A:

If you receive more than one proxy card, it means that you hold shares of SYNNEX common stock that are registered in more than one account. For example, if you own your shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and you will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Therefore, to ensure that all of your shares of SYNNEX common stock are voted, you will need to submit your proxies by mailing in each proxy card you receive or by telephone or through the internet by using the different voter control number(s) on each proxy card.

 

Q:

What is householding and how does it affect me?

 

A:

The SEC permits companies to send a single set of certain disclosure documents to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if the company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. This householding process reduces the volume of duplicate information and reduces printing and mailing expenses. If your family has multiple accounts holding shares of SYNNEX common stock, you may have already received a householding notification. For additional information, see the section entitled “Householding of Proxy Material.”

 

Q:

What happens if I sell my shares of SYNNEX common stock before the special meeting?

 

A:

The record date for the special meeting is earlier than the expected date of completion of the Merger. If you own shares of SYNNEX common stock as of the close of business on the record date but transfer your shares prior to the special meeting, you will retain your right to vote at the special meeting.

 

Q:

Do I have appraisal rights in connection with the Merger?

 

A:

SYNNEX’ stockholders do not have appraisal rights in connection with the Merger.

 

Q:

When is the Merger expected to be completed?

 

A:

We are working toward completing the Merger as quickly as possible. We currently anticipate that the Merger will be completed in the second half of the calendar year 2021, but we cannot be certain when or if the conditions to the Merger will be satisfied or, to the extent permitted, waived. The Merger cannot be completed until the conditions to closing are satisfied (or, to the extent permitted, waived). For additional information, see the section entitled “The Merger Agreement—Conditions to the Merger.”

 

Q:

What happens if the Merger is not completed?

 

A:

If the Merger is not completed at any time prior to the effective time of the Merger by mutual written agreement of SYNNEX and Tiger Parent or for any other reason, the Merger Agreement will be void and have no effect, and there will not be any liability or obligation on the part of any party, except that (i) no termination will relieve any party from liability for any Willful Breach, (ii) no termination will affect the obligations of the parties contained in the confidentiality agreement between them, and (ii) certain other provisions of the Merger Agreement, including provisions with respect to the allocation of fees and expenses, including, if applicable, the termination fees described below, will survive such termination.

We expect that our management will operate our business in a manner similar to that in which it is being operated today and that holders of shares of SYNNEX common stock will continue to be subject to the same risks and opportunities to which they are currently subject with respect to their ownership of SYNNEX common stock. Under certain circumstances, if the Merger is not completed, we may be obligated to pay a termination fee. For additional information, see the section entitled “The Merger—Consequences if the Merger is Not Completed.”

 

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Q:

Are there any requirements if I plan on attending the special meeting?

 

A:

The special meeting will be held via live audio webcast only because of the public health impact of the COVID-19 pandemic. Any stockholder of record will be able to attend the special meeting by first registering at https://viewproxy.com/synnex/2021sm/htype.asp, where stockholders will receive a meeting invitation by e-mail with a unique join link along with a password prior to the meeting date. Stockholders will be able to listen, vote and submit questions during the virtual meeting. Instructions on how to vote during the meeting will be available on the virtual meeting website during the meeting.

If you are a registered holder, your virtual control number will be on your proxy card. If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the special meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the special meeting (but will not be able to vote your shares) so long as you demonstrate proof of stock ownership.

 

Q:

Where can I find more information about SYNNEX?

 

A:

SYNNEX files periodic reports, proxy statements and other information with the SEC. Our SEC filings are available to the public at the SEC’s website at www.sec.gov. For a more detailed description of the information available, see the section entitled “Where You Can Find More Information.”

 

Q:

Where can I find more information about Tiger Parent and Tech Data?

 

A:

Tiger Parent is the indirect parent entity of Tech Data. You can also find more information on Tech Data’s website at www.techdata.com.

 

Q:

Who can help answer my questions?

 

A:

For additional questions about the Merger, assistance in submitting proxies or voting shares of SYNNEX common stock, or additional copies of this proxy statement or the enclosed proxy card, please contact Liz Morali, Investor Relations, by phone at (510) 668-8436 or by email at ir@synnex.com.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain information in this proxy statement constitutes “forward-looking statements.” Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks,” “targets” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “would,” “aims,” “intends” or “projects.” However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. We caution that forward-looking statements are qualified by the existence of certain risks and uncertainties that could cause actual results and events to differ materially from what is contemplated by the forward-looking statements. Factors that could cause our actual results to differ materially from these forward-looking statements may include, without limitation:

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

   

the closing conditions of the Merger may not be satisfied in a timely manner or at all, including due to the failure to obtain SYNNEX’ stockholder approval and required regulatory approvals;

 

   

the announcement and pendency of the Merger may disrupt our business operations (including the threatened or actual loss of employees, customers or suppliers);

 

   

SYNNEX could experience financial or other setbacks if the transaction encounters unanticipated problems;

 

   

difficulties and delays in integrating the businesses of SYNNEX and Tech Data following completion of the Merger or fully realizing the anticipated cost synergies and other benefits expected from the Merger;

 

   

risks related to the diversion of the attention and time of SYNNEX’ or Tech Data’s respective management teams from ongoing business concerns;

 

   

the potential dilution of SYNNEX’ stockholders’ ownership percentage of the combined company as compared to their ownership percentage of SYNNEX prior to the Merger;

 

   

the potential dilution of the combined company’s earnings per share as a result of the Merger;

 

   

the possibility that the combined company’s results of operations, cash flows and financial position after the Merger may differ materially from the unaudited pro forma condensed combined financial information contained in this proxy statement;

 

   

the COVID-19 pandemic;

 

   

the seasonality of buying patterns of our customers;

 

   

the concentration of sales to large customers;

 

   

the dependence upon and trends in capital spending budgets in the IT and consumer electronics industries;

 

   

fluctuations in general economic conditions;

 

   

change in market for our customers’ products;

 

   

employee turnover;

 

   

changes in value of foreign currencies and interest rates; and

 

   

the other risk factors discussed in the section of this proxy statement entitled “Risk Factors.”

The foregoing list of factors should not be construed as exhaustive. SYNNEX can give no assurance that the expectations expressed or implied in the forward-looking statements contained herein will be attained. The

 

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statements made in this proxy statement are current as of the date of this proxy statement only. SYNNEX undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

 

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RISK FACTORS

In deciding whether to vote for the Merger Agreement Proposal, Share Issuance Proposal, Authorized Share Charter Amendment Proposal, the Corporate Opportunity Charter Amendment Proposal and the Adjournment Proposal, you are urged to carefully consider all of the information included or incorporated by reference in this proxy statement, which are listed in the section entitled “Where You Can Find More Information.” You should also read and consider the risks associated with each of the businesses of SYNNEX and Tech Data because these risks will also affect the combined company. The risks associated with the business of SYNNEX can be found in the SYNNEX Annual Report on Form 10-K for the year ended November 30, 2020 under the heading “Risk Factors”, as such risks may be updated or supplemented in SYNNEX’ subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, such risk factors which are incorporated by reference into this proxy statement. Risks associated with the business of Tech Data can be found below in the section entitled “Risks Relating to Tech Data.” In addition, you are urged to carefully consider the following material risks relating to the Merger and the business of the combined company.

Risks Relating to the Merger

SYNNEX’ stockholders will have reduced ownership and voting interest in and will exercise less influence over management of the combined company.

SYNNEX’ stockholders currently have the right to vote in the election of the Board and on other matters affecting SYNNEX. Upon consummation of the Merger, each stockholder of SYNNEX will become a stockholder of the combined company with a percentage ownership of the combined company that is smaller than such stockholder’s percentage ownership of SYNNEX immediately prior to the Merger. As of the date of this proxy statement, based on the estimated number of shares of common stock of SYNNEX that will be outstanding immediately prior to the completion of the Merger, SYNNEX estimates that holders of shares of SYNNEX common stock as of immediately prior to the completion of the Merger will hold, in the aggregate, approximately 55% of the issued and outstanding shares of common stock of the combined company immediately following the completion of the Merger, and Tiger Holdings as of immediately prior to the completion of the Merger will hold, in the aggregate, approximately 45% of the issued and outstanding shares of common stock of the combined company immediately following the completion of the Merger. Accordingly, SYNNEX’ stockholders will have less influence on the management and policies of the combined company than they now have on the management and policies of SYNNEX.

Obtaining required approvals and satisfying closing conditions may prevent or delay completion of the Merger.

The Merger is subject to a number of conditions to closing as specified in the Merger Agreement, including, including (i) the approval of SYNNEX’ stockholders will have been obtained, (ii) the SYNNEX common stock issuable as Merger Consideration will have been authorized for listing on the NYSE, (iii) the HSR Act Clearance and other required regulatory approvals will have been obtained, and (iv) no law, order, injunction or decree will be in effect that prevents, makes illegal or prohibits the Merger. No assurance can be given that the required stockholder consents and approvals will be obtained or that the required conditions to closing will be satisfied, and, if all required consents and approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the consents and approvals. Any delay in completing the Merger could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that SYNNEX expects to achieve if the Merger is successfully completed within its expected time frame. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Merger, see the section entitled “The Merger Agreement—Conditions to the Merger.”

 

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In order to complete the Merger, SYNNEX and Tech Data must obtain certain governmental authorizations, and if such authorizations are not granted, the Merger cannot be completed.

Completion of the Merger is conditioned upon the expiration or early termination of the waiting period relating to the Merger under the HSR Act and other similar antitrust laws in certain other countries as well as certain other applicable laws or regulations and the governmental authorizations required to complete the Merger having been obtained and being in full force and effect. Although SYNNEX and Tech Data have agreed in the Merger Agreement to use their reasonable best efforts, subject to certain limitations, to make certain governmental filings or obtain the required governmental authorizations, as the case may be, there can be no assurance that the relevant waiting periods will expire or authorizations will be obtained, and if such authorizations are not obtained, the Merger will not be completed.

The Merger Agreement may be terminated in accordance with its terms.

Either SYNNEX or Tiger Parent may terminate the Merger Agreement under certain circumstances, including, among other reasons, if the Merger is not completed by December 22, 2021 (which date may be extended to March 22, 2022 under circumstances if certain regulatory approvals have not been obtained by December 22, 2021 and then again to June 22, 2022 under such circumstances if such regulatory approvals have not been obtained by March 22, 2022). In addition, if the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, SYNNEX may be required to pay Tiger Parent a termination fee of up to $131,683,200, including certain circumstances in which the Board effects a change of recommendation (as defined in the section entitled “The Merger Agreement—Change of Recommendation”) or under certain circumstances where SYNNEX enters into an agreement with respect to (or consummates) a superior proposal following the termination of the Merger Agreement. See the section entitled “The Merger Agreement—Termination Fees” for a more complete discussion of the circumstances under which the Merger Agreement could be terminated and when a termination fee may be payable by SYNNEX.

SYNNEX may waive one or more of the closing conditions without re-soliciting stockholder approval.

SYNNEX may determine to waive, in whole or part, one or more of the conditions of its obligations to consummate the Merger. SYNNEX currently expects to evaluate the materiality of any waiver and its effect on SYNNEX’ stockholders in light of the facts and circumstances at the time to determine whether any amendment of this proxy statement or any re-solicitation of proxies or voting cards is required in light of such waiver. Any determination whether to waive any condition to the Merger or as to re-soliciting stockholder approval or amending this proxy statement as a result of a waiver will be made by SYNNEX at the time of such waiver based on the facts and circumstances as they exist at that time.

SYNNEX and Tech Data’s business relationships may be subject to disruption due to uncertainty associated with the Merger.

Parties with which SYNNEX or Tech Data do business may experience uncertainty associated with the Merger, including with respect to current or future business relationships with us, Tech Data or the combined business. SYNNEX and Tech Data’s business relationships may be subject to disruption as customers, vendors and others may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than SYNNEX, Tech Data or the combined business. These disruptions could have a material and adverse effect on the businesses, financial condition, results of operations or prospects of the combined business, including a material and adverse effect on our ability to realize the anticipated benefits of the Merger. The risk and adverse effect of such disruptions could be exacerbated by a delay in completion of the Merger or termination of the Merger Agreement.

 

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Failure to complete the Merger could negatively impact the stock price and the future business and financial results of SYNNEX.

If the Merger is not completed for any reason, including SYNNEX’ stockholders’ failing to approve the issuance of the SYNNEX common stock in connection with the Merger, the ongoing business of SYNNEX may be adversely affected and, without realizing any of the benefits of having completed the Merger, SYNNEX would be subject to a number of risks, including the following:

 

   

We may experience negative reactions from the financial markets, including negative impacts on our stock price, and from our customers, vendors and employees;

 

   

We may be required to pay Tech Data a fee of up to approximately $132 million if the Merger is not consummated;

 

   

We will be required to pay certain transaction expenses and other costs relating to the Merger, whether or not the Merger is completed;

 

   

The Merger Agreement places certain restrictions on the conduct of our business prior to completion of the Merger; and

 

   

Matters relating to the Merger (including integration planning) will require substantial commitments of time and resources by our management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to us as an independent company.

There can be no assurance that the risks described above will not materialize. If any of those risks materialize, they may materially and adversely affect SYNNEX’ businesses, financial condition, financial results and stock price.

The directors and executive officers of SYNNEX have interests and arrangements that may be different from, or in addition to, those of SYNNEX’ stockholders.

When considering the recommendations of the Board with respect to the proposals described in this proxy statement, SYNNEX’ stockholders should be aware that the directors and executive officers of SYNNEX have interests in the Merger that are different from, or in addition to, those of SYNNEX’ stockholders generally. These interests include the continued employment of certain executive officers of SYNNEX by the combined company, the continued service of certain directors of SYNNEX as directors of the combined company, the treatment in the Merger of outstanding equity, equity-based and incentive awards, severance arrangements, other compensation and benefit arrangements, and the right to continued indemnification of former directors and officers by the combined company.

SYNNEX’ stockholders should be aware of these interests when they consider the recommendations of the Board. The Board was aware of and considered these interests when it (i) determined that the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, are fair to, and in the best interests of, SYNNEX and SYNNEX’ stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, (iii) directed that the Merger Agreement, issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation be submitted to SYNNEX’ stockholders for their approval, and (iv) resolved to recommend that the stockholders of SYNNEX adopt the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation on the terms and subject to the conditions set forth in the Merger Agreement. The interests of our Board and our executive officers are described in more detail in the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger.”

 

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SYNNEX and Tech Data may have difficulty attracting, motivating and retaining executives and other key employees in light of the Merger.

Uncertainty about the effect of the Merger on SYNNEX and Tech Data employees, including the change in Chief Executive Officer, may have an adverse effect on each of SYNNEX and Tech Data separately and consequently the combined business. This uncertainty may impair SYNNEX’ and Tech Data’s ability to attract, retain and motivate key personnel until the Merger is completed. Employee retention may be particularly challenging during the pendency of the Merger, as employees of SYNNEX and Tech Data may experience uncertainty about their future roles with the combined business. Furthermore, if key employees of SYNNEX or Tech Data depart or are at risk of departing, including because of issues relating to the uncertainty and difficulty of integration, financial security or a desire not to become employees of the combined business, we may have to incur significant costs in retaining such individuals or in identifying, hiring and retaining replacements for departing employees, and our ability to realize the anticipated benefits of the Merger may be adversely affected.

Stockholder lawsuits relating to the Merger have been filed against us, which could result in substantial costs and may delay or prevent the Merger from being completed.

Stockholder lawsuits are often brought against companies that have entered into merger agreements. As of June 8, 2021, three such suits have been brought against SYNNEX and the Board. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting consummation of the Merger, then that injunction may delay or prevent the Merger from being completed.

The proposed acquisition of Tech Data and the incurrence of debt to fund the proposed acquisition of Tech Data may impact our financial position and subject us to additional financial and operating restrictions.

As of February 28, 2021, we had $1.6 billion of total debt, and as of May 31, 2021 this amount has not materially changed. We expect to incur a substantial amount of additional debt in connection with the proposed acquisition of Tech Data. We expect that upon completion of the proposed acquisition of Tech Data and the related financing transactions, our total debt will increase to approximately $4 billion. In addition, we expect to have capacity to incur significant additional debt in excess of $4 billion to fund our working capital needs and for other corporate purposes. If we are unable to raise financing on acceptable terms, we may need to rely on the Bridge Facility, which would result in higher borrowing costs and will have a shorter maturity than those from anticipated, long-term debt financing alternatives. In addition, if we are unable to obtain long-term debt financing on the terms we anticipate, then such alternative long-term debt financing may subject us to higher costs of borrowing, and additional financial and operating covenants, which may limit our flexibility in responding to our business needs. We expect to obtain long term unsecured debt financing in lieu of all or a portion of the commitments provided under Tranche C of the Bridge Facility. However, there can be no assurance we will be able to obtain such permanent debt financing or that it will be on acceptable terms. In addition, we anticipate that as a result of the debt we expect to incur to finance the proposed acquisition, our credit and the long term debt financing will be rated by credit rating agencies. Any potential future negative change in our credit ratings may make it more expensive for us to raise long term permanent financing on terms that are acceptable to us or to raise additional capital on terms that are acceptable to us, if at all; negatively impact the price of our common stock; increase our overall cost of capital; and have other negative implications on our business, many of which are beyond our control.

The expected replacement of the LIBOR benchmark interest rate and other interbank offered rates with risk-free rates may have an impact on our business.

On July 27, 2017, the U.K. Financial Conduct Authority (which we refer to as the “FCA”), which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR rates after 2021. As a result, the continuation of LIBOR on the current basis cannot be guaranteed after 2021 and

 

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it is likely that LIBOR will be phased out or modified by 2023. The FCA and the submitting LIBOR banks have indicated they will support the LIBOR indices through 2021 to allow for an orderly transition to an alternative reference rate. Financial services regulators and industry groups are evaluating the phase-out of LIBOR and the development of alternate reference rate indices or reference rates. In the United States, the Alternative Reference Rates Committee (which we refer to as the “ARRC”) was tasked with identifying alternative reference rates to replace LIBOR. The Secured Overnight Financing Rate (which we refer to as “SOFR”) has emerged as the ARRC’s preferred alternative rate for LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by the Treasury securities in the repurchase agreement market. Accordingly, the composition and characteristics of SOFR are not the same as those of U.S. dollar LIBOR and SOFR is not the economic equivalent of U.S. dollar LIBOR. While SOFR is a secured rate, U.S. dollar LIBOR is an unsecured rate. In addition, while SOFR is a backward-looking rate based on an overnight rate, U.S. dollar LIBOR is a forward-looking rate that represents interbank funding for a specified term. In the future, including as a result of the Merger, we may have other debt that is linked to interbank offered rates in other currencies that will be phased out and replaced by other alternative reference rates based on local currencies. At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates. In addition, it is uncertain what methods of calculating a replacement rate will be adopted generally or whether different industry bodies, such as the loan market and the derivative market, will adopt the same methodologies.

As of February 28, 2021, we had $1.6 billion of debt outstanding on facilities with interest rates based on LIBOR, and as of May 31, 2021, this has not materially changed. Some of our credit facilities include fallback language that seeks to facilitate an agreement with our lenders on a replacement rate for LIBOR in the event of its discontinuance or that automatically replaces LIBOR with benchmark rates based on SOFR upon certain triggering events. We cannot predict what the impact of any such replacement rate would be to our interest expense. Potential changes to the underlying floating-rate indices and reference rates may have an adverse impact on our liabilities indexed to LIBOR and could have a negative impact on our profitability and cash flows. Furthermore, we cannot predict or quantify the time, effort and cost required to transition to the use of new benchmark rates, including with respect to negotiating and implementing any necessary changes to existing contractual agreements, and implementing changes to our systems and processes. We continue to evaluate the operational and other effects of such changes.

We will incur significant transaction and integration-related costs in connection with the Merger.

We expect to incur a number of non-recurring costs associated with the Merger and combining the operations of Tech Data with our operations. We will incur significant transaction costs related to the Merger. We also will incur significant integration-related fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs. We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Merger and the integration of Tech Data into our business. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

If our due diligence investigation of Tech Data was inadequate or if unexpected risks related to Tech Data’s business materialize, it could have a material adverse effect on our stockholders’ investment.

Even though we conducted a due diligence investigation of Tech Data, we cannot be sure that our diligence surfaced all material issues that may be present inside Tech Data or its business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Tech Data and its business and outside of its control will not arise later. If any such material issues arise, they may materially and adversely impact the ongoing business of the combined company and our stockholders’ investment.

The lack of a public market for Tiger Parent’s shares makes it difficult to evaluate the value of such shares.

The outstanding capital stock of Tiger Parent is privately held and is not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of Tiger Parent. Because the percentage of

 

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SYNNEX’ equity to be issued to Tiger Holdings as the Merger Consideration will be determined based on an exchange ratio set forth in the Merger Agreement as a result of negotiations between the parties that will not be adjusted even if there is a change in the value of SYNNEX, it is possible that the value of SYNNEX common stock to be received by Tiger Holdings will be more than the fair market value of Tiger Parent.

The opinions rendered to SYNNEX from Duff & Phelps will not reflect changes in circumstances between the dates of such opinions and the completion of the Merger.

On March 16, 2021, Duff & Phelps delivered its Opinion to the Board that, as of the date of the Opinion and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in such Opinion, the consideration to be paid by SYNNEX in the Merger was fair, from a financial point of view, to SYNNEX and its stockholders (without giving effect to any impact of the Merger on any particular stockholder other than in its capacity as a stockholder).

SYNNEX has not obtained, nor will it obtain, an updated opinion regarding the fairness, from a financial point of view, of the Merger Consideration as of the date of this proxy statement or prior to the completion of the Merger from Duff & Phelps. Duff & Phelps’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Duff & Phelps only as of the date of the opinion and does not address the fairness of the Merger Consideration, from a financial point of view, at the time the Merger is completed. Changes in the operations and prospects of SYNNEX and Tech Data, general economic, monetary, market and other conditions and other factors that may be beyond the control of SYNNEX and Tech Data, and on which the opinion of Duff & Phelps was based, may alter the value of SYNNEX or Tech Data or the prices of shares of SYNNEX common stock or Tiger Parent’s common stock by the time the Merger is completed. The opinion of Duff & Phelps does not speak as of any date other than the date of such opinion. For a more complete description of the above-described opinion, please refer to “The Merger—Opinion of Duff  & Phelps, LLC.”

Risks Relating to the Combined Company

After completion of the Merger, we may fail to realize the anticipated benefits of the Merger, which could adversely affect the value of our common stock.

The success of the Merger will depend, in part, on our ability to realize the anticipated benefits from combining the businesses of SYNNEX and Tech Data. Our ability to realize these anticipated benefits and cost savings is subject to certain risks including:

 

   

our ability to successfully combine the businesses of SYNNEX and Tech Data;

 

   

whether the combined businesses will perform as expected;

 

   

the reduction of our cash available for operations and other uses and the incurrence of indebtedness to finance the acquisition; and

 

   

the assumption of known and unknown liabilities of Tech Data.

If we are not able to successfully combine the businesses of SYNNEX and Tech Data within the anticipated time frame, or at all, the anticipated cost savings and other benefits of the Merger may not be realized fully or at all or may take longer to realize than expected, the combined businesses may not perform as expected, and the value of our common shares may be adversely affected.

SYNNEX and Tech Data have operated and, until completion of the Merger, will continue to operate, independently, and there can be no assurances that our businesses can be integrated successfully. It is possible that the integration process could result in the loss of key SYNNEX or Tech Data employees, the disruption of either or both company’s ongoing businesses, higher than expected integration costs and an overall post-

 

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completion integration process that takes longer than originally anticipated. Specifically, issues that must be addressed to realize the anticipated benefits of the Merger so the combined business performs as expected include, among other things:

 

   

integrating the companies’ technologies, products and services;

 

   

identifying and eliminating redundant and underperforming operations and assets;

 

   

harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

 

   

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

 

   

consolidating the companies’ corporate, administrative and information technology infrastructure;

 

   

managing the movement of certain businesses and positions to different locations;

 

   

maintaining existing agreements with customers and vendors and avoiding delays in entering into new agreements with prospective customers and vendors; and

 

   

consolidating offices of SYNNEX and Tech Data that are currently in or near the same location.

In addition, at times, the attention of certain members of either or both companies’ management and resources may be focused on completion of the Merger and the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt each company’s ongoing business and the business of the combined company.

The market price for shares of common stock of the combined company following the completion of the Merger may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of SYNNEX common stock.

Upon consummation of the Merger, SYNNEX’ stockholders and Tiger Holdings will both hold shares of common stock in the combined company. SYNNEX’ and Tech Data’s businesses differ and, accordingly, the results of operations of the combined company will be affected by some factors that are different from those currently or historically affecting the results of operations of SYNNEX and those currently or historically affecting the results of operations of Tech Data. The results of operations of the combined company may also be affected by factors different from those that currently affect or have historically affected either SYNNEX or Tech Data. For a discussion of the businesses of each of SYNNEX and Tech Data and some important factors to consider in connection with those businesses, please see the section entitled “Parties to the Merger” and the documents and information included elsewhere in this proxy statement or incorporated by reference into this proxy statement and listed under the section entitled “Where You Can Find More Information.”

The SYNNEX and Tech Data unaudited prospective financial information is inherently subject to uncertainties, the unaudited pro forma condensed combined financial information included in this document is preliminary and the combined company’s actual financial position and results of operations after the Merger may differ materially from these estimates and the unaudited pro forma condensed combined financial information included in this proxy statement.

The unaudited pro forma condensed combined financial information included in this proxy statement is presented for illustrative purposes only, contains a variety of adjustments, assumptions and preliminary estimates and is not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the Merger been completed on the dates indicated. The combined company’s actual results and financial position after the Merger may differ materially and adversely from the unaudited pro forma condensed combined financial information included in this proxy statement. For more information, see the sections entitled “SYNNEX Unaudited Pro Forma Condensed Combined Financial Statements.”

 

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While presented with numeric specificity, the SYNNEX and Tech Data unaudited prospective financial information provided in this proxy statement is based on numerous variables and assumptions (including, but not limited to, those related to industry performance and competition and general business, economic, market and financial conditions and additional matters specific to SYNNEX’ or Tech Data’s business, as applicable) that are inherently subjective and uncertain and are beyond the control of the respective management teams of SYNNEX and Tech Data. As a result, actual results may differ materially from the unaudited prospective financial information. Important factors that may affect actual results and cause these unaudited projected financial forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to SYNNEX’ or Tech Data’s business, as applicable (including each company’s ability to achieve strategic goals, objectives and targets over applicable periods), general business and economic conditions. For more information see the sections entitled “The Merger—Certain SYNNEX Projections.”

Apollo will be able to exercise significant influence over the composition of the Board, matters subject to stockholder approval and/or SYNNEX’ operations.

Upon the completion of the Merger, the number of shares of SYNNEX common stock issuable as a portion of the Merger Consideration will be 44 million shares, which will result in Tiger Holdings, an affiliate of Apollo and sole holder of shares of Tiger Parent’s common stock, holding approximately 45% of the outstanding shares of SYNNEX common stock, based on the number of outstanding shares of common stock of SYNNEX as of June 8, 2021.

In addition, SYNNEX and Tiger Holdings will enter into the Investor Rights Agreement at the closing, which provides that following the closing, the Board shall be comprised of eleven directors, and Tiger Holdings shall have the right to nominate a certain number of directors, depending on the percentage of the outstanding shares of SYNNEX common stock held by Tiger Holdings or certain of its affiliates, as further described in the section entitled “Investor Rights Agreement.”

As a result of the SYNNEX common stock that will be held by affiliates of Apollo and the Investor Rights Agreement described above, Apollo will be in a position to influence (subject to organizational documents and Delaware law) the composition of the Board and the outcome of corporate actions requiring stockholder approval, such as mergers, business combinations and dispositions of assets, among other corporate transactions. This concentration of investment and voting power could discourage others from initiating a potential merger, takeover or other change of control transaction that may otherwise be beneficial to SYNNEX and its stockholders, which could adversely affect the market price of SYNNEX common stock.

Risks Relating to Tech Data

Because SYNNEX and Tech Data operate similar businesses in similar industries, many of the risks relating to SYNNEX and its business disclosed in SYNNEX’ filings with the SEC are applicable to Tech Data and its business as well. This section should be read in conjunction with the risks relating to SYNNEX and its business disclosed in SYNNEX’ filings with the SEC.

Tech Data’s ability to earn profit is more challenging when sales slow from a down economy as a result of gross profit declining faster than cost reduction efforts taking effect.

Adverse economic conditions may result in lower demand for the products and services Tech Data sells. When Tech Data experiences a rapid decline in demand for products, Tech Data experiences more difficulty in achieving the gross profit and operating profit it desires due to the lower sales and increased pricing pressure. The economic environment may also result in changes in vendor terms and conditions, such as rebates, cash discounts and cooperative marketing efforts, which may also result in downward pressure on Tech Data’s gross profit. As a result, there is pressure to reduce the cost of operations in order to maximize operating profits. To the extent Tech Data cannot reduce costs to offset such decline in gross profits, Tech Data’s operating profits

 

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typically deteriorate. The benefits from cost reductions may also take longer to fully realize and may not fully mitigate the impact of the reduced demand or changes in vendor terms and conditions. Should Tech Data experience a decline in operating profits or not achieve the planned level of growth in operations of previously acquired companies, the valuations Tech Data develops for purposes of its goodwill impairment test may be adversely affected, potentially resulting in impairment charges. Deterioration in the financial and credit markets heightens the risk of customer bankruptcies and delays in payment. Future deterioration in the credit markets could result in reduced availability of credit insurance to cover customer accounts. This, in turn, may result in Tech Data reducing the credit lines Tech Data provides to customers, thereby having a negative impact on Tech Data’s net sales, gross profits and net income.

Tech Data’s competitors can take more market share by reducing prices on vendor products that contribute the most to Tech Data’s profitability.

The technology distribution industry is characterized by intense competition, based primarily on product availability, credit terms and availability, price, effectiveness of information systems and e-commerce tools, speed of delivery, ability to tailor specific solutions to customer needs, quality and depth of product lines and training, service and support. Tech Data’s customers are not required to purchase any specific volume of products from Tech Data and may move business if pricing is reduced by competitors, resulting in lower sales. As a result, Tech Data must be extremely flexible in determining when to reduce prices to maintain market share and sales volumes and when to allow the sales volumes to decline to maintain the quality of Tech Data’s profitability. Tech Data competes with a variety of regional, national and international wholesale distributors, some of which may have greater financial resources than Tech Data.

Tech Data is dependent on internal information and telecommunications systems, and any failure of these systems, including system security breaches, data protection breaches or other cybersecurity attacks, may negatively impact Tech Data’s business and results of operations.

Cyber-attacks and other tactics designed to gain access to and exploit sensitive information by breaching mission critical systems of large organizations are constantly evolving and have been increasing in sophistication in recent years. High profile security breaches leading to unauthorized release of sensitive information have occurred with increasing frequency at a number of major U.S. companies, despite widespread recognition of the cyber-attack threat and improved data protection methods. In addition, regulations related to data protection, including the European Union’s General Data Protection Regulation (which we refer to as “GDPR”) which took effect in May 2018, create a range of new compliance obligations for Tech Data. While to date Tech Data has not experienced a significant data loss, significant compromise or any material financial losses related to cybersecurity attacks, Tech Data’s systems, those of Tech Data’s customers, and those of Tech Data’s third-party service providers are under constant threat. Cybercrime, including phishing, social engineering, attempts to overload Tech Data’s servers with denial-of-service attacks, or similar disruptions from unauthorized access to Tech Data’s systems, could cause critical data loss or the disclosure or use of personal or other confidential information. Outside parties may attempt to fraudulently induce employees to disclose personally identifiable information or other confidential information which could expose Tech Data to a risk of loss or misuse of this information.

Tech Data is dependent on internal information and telecommunications systems, and Tech Data is vulnerable to failure of these systems, including through system security breaches, data protection breaches or other cybersecurity attacks. If these events occur, the unauthorized disclosure, loss or unavailability of data and disruption to Tech Data’s business may have a material adverse effect on Tech Data’s reputation and harm Tech Data’s relationships with vendors and customers. Additionally, these events may lead to financial losses from remedial actions, or potential liability from fines, including in relation to noncompliance with the GDPR, as well as possible litigation and punitive damages. Failures of Tech Data’s internal information or telecommunications systems may prevent Tech Data from taking customer orders, shipping products and billing customers. Sales may also be impacted if Tech Data customers are unable to access Tech Data’s pricing and product availability

 

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information. The occurrence of any of these events could have a material adverse impact on Tech Data’s business and results of operations.

Tech Data may not be able to ship products if Tech Data’s third party shipping companies cease operations temporarily or permanently.

Tech Data relies on arrangements with independent shipping companies for the delivery of its products from vendors and to customers. The failure or inability of these shipping companies to deliver products or the unavailability of their shipping services, even temporarily, may have an adverse effect on Tech Data’s business and operating results.

If Tech Data’s vendors do not continue to provide price protection for inventory Tech Data purchases from them, Tech Data’s profit from the sale of that inventory may decline.

It is very typical in this industry that the value of inventory will decline as a result of price reductions by vendors or technological obsolescence. It is the policy of many of Tech Data’s vendors to protect distributors from the loss in value of inventory due to technological change or the vendors’ price reductions. Some vendors, however, may be unwilling or unable to pay Tech Data for price protection claims or products returned to them under purchase agreements. Moreover, industry practices are sometimes not embodied in written agreements and do not protect Tech Data in all cases from declines in inventory value. No assurance can be given that such practices to protect distributors will continue, that unforeseen new product developments will not adversely affect Tech Data or that Tech Data will be able to successfully manage its existing and future inventories.

Failure to obtain adequate product supplies from Tech Data’s largest vendors, or terminations of a supply or services agreement, or a significant change in vendor terms or conditions of sale by Tech Data’s largest vendors may negatively affect Tech Data’s financial condition or results of operations.

A significant percentage of Tech Data’s revenues are from products it purchases from certain vendors, such as Apple, Inc., HP Inc. and Cisco Systems, Inc. These vendors have significant negotiating power over Tech Data and rapid, significant or adverse changes in sales terms and conditions, such as reducing the amount of price protection and return rights as well as reducing the level of purchase discounts and rebates they make available to Tech Data, may reduce the profit Tech Data can earn on these vendors’ products and result in loss of revenue and profitability. Tech Data’s gross profit could be negatively impacted if it is unable to pass through the impact of these changes to Tech Data’s customers or cannot develop systems to manage ongoing vendor programs. Additionally, significant changes in vendor payment terms or payment arrangements could negatively impact Tech Data’s liquidity and financial condition. Tech Data’s standard vendor distribution agreement permits termination without cause by either party upon 30 days’ notice. The loss of a relationship with any of Tech Data’s key vendors, a change in their strategy (such as increasing direct sales), the merger or reorganization of significant vendors or significant changes in terms on their products may adversely affect Tech Data’s business.

Tech Data conducts business in countries outside of the U.S., which exposes it to fluctuations in foreign currency exchange rates that result in losses in certain periods.

Approximately 62%, 58%, 60% and 61% of Tech Data’s net sales during the period from July 1, 2020 to January 31, 2021, the period from February 1, 2020 to June 30, 2020 and the fiscal years ended January 31, 2020 and January 31, 2019, respectively, were generated in countries outside of the U.S., which exposes Tech Data to fluctuations in foreign currency exchange rates. Tech Data may enter into short-term forward exchange or option contracts to hedge this risk. Nevertheless, volatile foreign currency exchange rates increase Tech Data’s risk of loss related to products purchased in a currency other than the currency in which those products are sold. While Tech Data maintains policies to protect against fluctuations in currency exchange rates, extreme fluctuations have resulted in Tech Data incurring losses in some countries. Furthermore, Tech Data’s local competitors in certain markets may have different purchasing models that provide them reduced foreign currency exposure

 

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compared to Tech Data. This may result in market pricing that Tech Data cannot meet without significantly lower profit on sales. In addition, Tech Data may be exposed to foreign exchange risk that may occur as a result of the United Kingdom’s (which we refer to as “U.K.”) withdrawal from the European Union, commonly referred to as “Brexit”. Brexit may adversely affect global economic and market conditions and could contribute to volatility in the foreign exchange markets, which Tech Data may be unable to effectively manage through its foreign exchange risk management program.

The translation of the financial statements of foreign operations into U.S. dollars is also impacted by fluctuations in foreign currency exchange rates, which may positively or negatively impact Tech Data’s results of operations. In addition, the value of Tech Data’s equity investment in foreign countries may fluctuate based upon changes in foreign currency exchange rates. These fluctuations, which are recorded in a cumulative translation adjustment account, may result in losses in the event a foreign subsidiary is sold or closed at a time when the foreign currency is weaker than when Tech Data made investments in the country. The realization of any or all of these risks could have a significant adverse effect on Tech Data’s financial results.

Natural disasters, public health crises and other catastrophic events or other events outside of Tech Data’s control may negatively impact Tech Data’s business and results of operations.

If any of Tech Data’s facilities or the facilities of its suppliers, service providers, or customers, is affected by public health crises, such as pandemics and epidemics; political crises, such as terrorism, war, political instability or other conflict; or other events outside of its control, Tech Data’s business, operating results and reputation could suffer. Moreover, these types of events could negatively impact the availability of products from Tech Data’s suppliers, consumer and business spending in the impacted regions or globally, which could adversely impact its operating results.

For example, in March 2020, the World Health Organization declared the outbreak of the COVID-19 pandemic. The global impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets and creating increasing volatility, and impeded global supply chains, including Tech Data’s. Tech Data’s suppliers are experiencing delays in the production and export of their products, and Tech Data has experienced impacts to its freight and logistic operations, including increased costs. Additionally, Tech Data may need to close logistics centers for a period of time as a result of government mandates or self-imposed health and safety initiatives. While Tech Data has initiated short-term measures to address delays in its supply chain, including advance purchases, such measures may not be sufficient to fully mitigate the effects of the COVID-19 pandemic, and such steps may negatively impact Tech Data’s financial condition.

The potential impact of the COVID-19 pandemic on financial and credit markets, including impacts on the ability of Tech Data’s customers to obtain access to sources of liquidity, heightens the risk of customer bankruptcies and delays in payment which could result in increased credit losses. Future deterioration in the credit markets could result in reduced availability of credit insurance to cover customer accounts. This, in turn, may result in reducing Tech Data’s credit lines they provide to customers, thereby having a negative impact on net sales, gross profits and net income. Tech Data’s business requires substantial capital to operate. Tech Data has historically relied upon cash generated from operations, bank credit lines, trade credit from vendors and accounts receivable purchase agreements to satisfy capital needs and to finance growth. Significant changes in vendor payment terms or payment arrangements due to the COVID-19 pandemic could negatively impact liquidity and financial condition. Tech Data has various committed and uncommitted lines of credit, short-term loans and overdraft facilities which are provided on an unsecured, short-term basis and are reviewed periodically for renewal, which may be impacted by the COVID-19 pandemic. Additionally, financial institutions’ willingness to purchase receivables under accounts receivable purchase agreements may be impacted by the COVID-19 pandemic.

Tech Data cannot at this time accurately predict what effects these conditions will have on its operations, including its ability to execute its business strategies and initiatives in the expected time frame, due to

 

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uncertainties including the severity and duration of the pandemic, the effect on its customers and customer demand and the length of the restrictions and closures imposed by various governments; however, it may experience a negative impact to its revenue and earnings from the COVID-19 pandemic in the fiscal 2022 or beyond.

In addition, certain of Tech Data’s facilities, including its corporate headquarters in Clearwater, Florida, are located in geographic areas that heighten its exposure to hurricanes, tropical storms and other severe weather events. Future weather events could cause severe damage to Tech Data’s property and technology and could cause major disruptions to its operations. Tech Data carries property damage and business interruption insurance; however, there can be no assurance that such insurance would be adequate to cover any losses Tech Data may incur. As such, a hurricane, tropical storm or severe weather event may have an adverse effect on Tech Data’s business, financial condition or results of operations.

Tech Data has international operations which exposes it to risks associated with conducting business in multiple jurisdictions.

Tech Data’s international operations are subject to other risks such as the imposition of governmental controls, export license requirements, restrictions on the export of certain technology, political instability, trade restrictions, tariff changes, uncertainty surrounding the implementation and effects of Brexit, difficulties in staffing and managing international operations, changes in the interpretation and enforcement of laws (in particular related to items such as duty and taxation), difficulties in collecting accounts receivable, longer collection periods, the impact of local economic conditions and practices, uncertainties arising from local business practices and cultural considerations, and enforcement of the Foreign Corrupt Practices Act, or similar laws of other jurisdictions.

The U.S. government has imposed tariffs on certain products imported into the U.S. and the Chinese government has imposed tariffs on certain products imported into China, which have increased the prices of many of the products that Tech Data purchases from its suppliers. The new tariffs, along with any additional tariffs or trade restrictions that may be implemented by the U.S. or other countries, could result in further increased prices. While Tech Data intends to pass price increases on to its customers, the effect of tariffs on prices may impact sales and results of operations. There can be no assurance that these and other factors will not have an adverse effect on Tech Data’s business.

Tech Data is subject to risks and uncertainties associated with the impact of trade discussions between the U.S. and China and related U.S. security risks and export controls. On May 15, 2019, the President of the United States issued an Executive Order that authorized export controls on Chinese entities determined to be a U.S. security threat. At the same time, the U.S. Commerce Dept. placed certain Chinese companies and their subsidiaries on the U.S. Entity List requiring U.S. companies to obtain export licensing approval before providing certain technology. Tech Data holds inventory of products impacted by the recent government action and there is uncertainty relating to the disposition of this inventory due to restrictions that would prevent purchasers from updating software on the products in the future. While Tech Data continues to take steps to mitigate its exposure to this situation, if the sale of these products is delayed or Tech Data is unable to return or dispose of its inventory on favorable economic terms, Tech Data may incur additional carrying costs for the inventory or otherwise record losses associated with the inventory.

Changes in tax laws or tax rulings in the jurisdictions in which Tech Data operates may materially impact its financial position and results of operations. The Organization for Economic Cooperation and Development has been working on the Base Erosion and Profit Sharing Project, and has issued and will continue to issue, guidelines and proposals that may change various aspects of the existing framework under which Tech Data’s tax obligations are determined in many of the countries in which it does business. Certain countries are evaluating their tax policies and regulations, which could affect international business and may have an adverse effect on Tech Data’s overall tax rate, along with increasing the complexity, burden and cost of tax compliance. For

 

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example, on December 22, 2017, the U.S. federal government enacted the U.S. Tax Cuts and Jobs Act (which we refer to as “U.S. Tax Reform”) which significantly revised U.S. corporate income tax law by, among other things, reducing the U.S. federal corporate income tax rate from 35% to 21% and implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. Additional changes in the U.S. tax regime or in how U.S. multinational corporations are taxed on foreign earnings, including changes in how existing tax laws are interpreted or enforced, could adversely affect Tech Data’s business, financial condition or results of operations.

In addition, while Tech Data’s labor force in the U.S. is currently non-union, employees of certain other subsidiaries are subject to collective bargaining or similar arrangements. Tech Data does business in certain foreign countries where labor disruption is more common than is experienced in the U.S. and some of the freight carriers Tech Data uses are unionized. A labor strike by a group of Tech Data’s employees, one of its freight carriers, one of its vendors, a general strike by civil service employees or a governmental shutdown could have an adverse effect on Tech Data’s business. Many of the products Tech Data sells are manufactured in countries other than the countries in which its logistics centers are located. The inability to receive products into the logistics centers because of government action or labor disputes at critical ports of entry may have an adverse effect on Tech Data’s business.

Tech Data has incurred substantial indebtedness that may impact its financial position and subject it to financial and operating restrictions, decrease its access to capital, and / or increase its borrowing costs, which may adversely affect its operations and financial results.

Tech Data’s business requires substantial capital to operate and to finance accounts receivable and product inventory that are not financed by trade creditors. Tech Data has historically relied upon cash generated from operations, bank credit lines, trade credit from vendors, accounts receivable purchase agreements, proceeds from public offerings of Tech Data’s common stock and proceeds from debt offerings to satisfy Tech Data’s capital needs and to finance growth. The incurrence of debt under Tech Data’s senior notes and other credit facilities subject it to financial and operating covenants, which may limit its ability to borrow and its flexibility in responding to its business needs.

As of January 31, 2021, Tech Data had approximately $2.3 billion of total debt. If Tech Data is not able to maintain compliance with stated financial covenants or if Tech Data breaches other covenants in any debt agreement, it could be in default under such agreement. Such a default may allow Tech Data’s creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross acceleration or cross-default provision applies. Tech Data’s overall leverage and terms of its financing could, among other things:

 

   

limit Tech Data’s ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or for general corporate purposes;

 

   

make it more difficult to satisfy Tech Data’s obligations under the terms of the debt;

 

   

limit its ability to refinance its debt on terms acceptable to Tech Data or at all;

 

   

make it more difficult to obtain trade credit from vendors;

 

   

limit Tech Data’s flexibility to plan for and adjust to changing business and market conditions and repurchase shares of its common stock; and

 

   

increase Tech Data’s vulnerability to general adverse economic and industry conditions.

Changes in Tech Data’s credit rating or other market factors may increase its interest expense or other costs of capital.

Certain of Tech Data’s financing instruments involve variable rate debt, thus exposing it to the risk of fluctuations in interest rates. In addition, the interest rate payable on the 2022 senior notes and the 2027 senior

 

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notes and certain other credit facilities would be subject to adjustment from time to time if Tech Data’s credit rating is downgraded. The U.K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. The U.S. Federal Reserve has begun publishing SOFR, which is intended to replace U.S. dollar LIBOR. Plans for alternative reference rates for other currencies have also been announced. At this time, Tech Data cannot predict how markets will respond to these proposed alternative rates or the effect of any changes to LIBOR or the discontinuation of LIBOR. If LIBOR is no longer available or if Tech Data’s lenders have increased costs due to changes in LIBOR, Tech Data may experience potential increases in interest rates on its variable rate debt, which could adversely impact its interest expense, results of operations and cash flows.

Tech Data cannot predict what losses it might incur in litigation matters, regulatory enforcement actions and contingencies that it may be involved with from time to time.

Tech Data cannot predict what losses it might incur from litigation matters, regulatory enforcement actions and contingencies that it may be involved with from time to time. There are various other claims, lawsuits and pending actions against Tech Data. From time to time, Tech Data is involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to its business, which may include claims with respect to antitrust, mergers and acquisitions and other matters. In the ordinary course of business, Tech Data also receives inquiries from and has discussions with government entities regarding the compliance of its contracting and sales practices with laws and regulations. These matters can be time-consuming, divert management’s attention and resources and cause Tech Data to incur significant expenses. Allegations made in the course of regulatory or legal proceedings may also harm Tech Data’s reputation, regardless of whether there is merit to such claims. Furthermore, because litigation and the outcome of regulatory proceedings are inherently unpredictable, Tech Data’s business, financial condition or operating results could be materially affected by an unfavorable resolution of one or more of these proceedings, claims, demands or investigations. Tech Data does not expect that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position. However, the resolution of certain of these matters could be material to its operating results for any particular period. Tech Data can make no assurances that it will ultimately be successful in its defense of any of these matters.

Risks Relating to SYNNEX

SYNNEX’ business will continue to be subject to the risks described in the sections entitled “Risk Factors” in SYNNEX’ Annual Report on Form 10-K for the year ended November 30, 2020, SYNNEX’ Quarterly Reports on Form 10-Q filed with the SEC on April 8, 2021, and in other documents incorporated by reference into this proxy statement. See the section entitled “Where You Can Find More Information” for the location of information incorporated by reference into this proxy statement.

 

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PARTIES TO THE MERGER

SYNNEX Corporation

We are a Fortune 200 corporation and a leading provider of a comprehensive range of distribution, systems design, and integration services for the technology industry to a wide range of enterprises.

We distribute peripherals, information technology (which we refer to as “IT”) systems including data center server and storage solutions, system components, software, networking, communications and security equipment, consumer electronics (which we refer to as “CE”) and complementary products. We also provide systems design and integration solutions. We distribute more than 40,000 technology products (as measured by active SKUs) from more than 500 IT, CE and original equipment manufacturers (which we refer to as “OEM”), suppliers to more than 25,000 resellers, system integrators, and retailers throughout the United States, Canada, Japan, Mexico and Central and South America. We purchase peripherals, IT systems, system components, software, networking, communications and security equipment, CE and complementary products from our suppliers and sell them to our reseller and retail customers. We perform a similar function for our distribution of licensed software products. Our reseller customers include value-added resellers, corporate resellers, government resellers, system integrators, direct marketers, and national and regional retailers. We combine our core strengths in distribution with demand generation, supply chain management and design and integration solutions to help our customers achieve greater efficiencies in time to market, cost minimization, real-time linkages in the supply chain and aftermarket product support. We also provide comprehensive IT solutions in key vertical markets such as government and healthcare and we provide specialized service offerings that increase efficiencies in the areas of print management, renewals, logistics services and supply chain management. Additionally, we provide our customers with systems design and integration solutions for data center servers and networking solutions built specific to our customers’ workloads and data center environments.

Founded in 1980, we operate in numerous countries throughout North and South America, Asia-Pacific, and Europe. SYNNEX’ principal executive offices are located at 44201 Nobel Drive, Fremont, California 94538, and its telephone number is (510) 656-3333.

We became a publicly traded company in 2003. Shares of SYNNEX common stock are listed on the NYSE and trade under the symbol “SNX.”

Our website address is https://www.synnex.com/. The information provided on our website is not part of this proxy statement and is not incorporated by reference in this proxy statement by this or any other reference to our website in this proxy statement.

Additional information about SYNNEX is contained in our public filings, which are incorporated by reference in this proxy statement. See the section entitled “Where You Can Find More Information” for more information.

Tiger Parent (AP) Corporation

Tiger Parent (AP) Corporation, a Delaware corporation, is the indirect parent of Tech Data Corporation, a Florida corporation. Tech Data’s end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow, and advance. Tech Data is ranked No. 90 on the Fortune 500 and has been named one of Fortune’s World’s Most Admired Companies for 11 straight years.

Tiger Parent’s principal executive offices are located at c/o Tech Data Corporation, 5350 Tech Data Drive, Clearwater, Florida 33760 and its telephone number is (727) 539-7429.

Spire Sub I, Inc.

Spire Sub I, Inc., a direct wholly owned subsidiary of SYNNEX, is a Delaware corporation incorporated for the purpose of effecting the Merger. Spire Sub I, Inc. has not conducted any activities other than those incidental to

 

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its incorporation and the matters contemplated by the Merger Agreement, including the preparation of applicable regulatory filings in connection with the Merger. The principal executive offices of Spire Sub I, Inc. are located at c/o SYNNEX Corporation, 44201 Nobel Drive, Fremont, California 94538 and its telephone number is (510) 656-3333.

Spire Sub II, LLC

Spire Sub II, LLC, a direct wholly owned subsidiary of SYNNEX, limited liability company formed for the purpose of effecting the Merger. Spire Sub II, LLC has not conducted any activities other than those incidental to its formation and the matters contemplated by the Merger Agreement, including the preparation of applicable regulatory filings in connection with the Merger. The principal executive offices of Spire Sub II, LLC are located at c/o SYNNEX Corporation, 44201 Nobel Drive, Fremont, California 94538 and its telephone number is (510) 656-3333.

 

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THE SPECIAL MEETING

We are furnishing this proxy statement as part of the solicitation of proxies by the Board for use at the special meeting and at any properly convened meeting following an adjournment or postponement of the special meeting.

Date, Time and Place of the Special Meeting

SYNNEX will hold the special meeting via live audio webcast on June 30, 2021, at 10:00 a.m., Pacific Time. The special meeting can be accessed by first registering at https://viewproxy.com/synnex/2021sm/htype.asp, where you will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. The registration deadline for the virtual meeting will be June 27, 2021 at 11:59 p.m., Eastern Time. You will be able listen, vote and submit questions during the virtual meeting. Please be sure to check in 15 minutes prior to the start of the meeting by 9:45 a.m., Pacific Time. Please note that you will not be able to attend the virtual special meeting in person.

Purpose of the Special Meeting

At the special meeting, SYNNEX’ stockholders of record will be asked to consider and vote on:

 

   

A proposal to adopt the Merger Agreement, pursuant to which, subject to the satisfaction or waiver of certain specified conditions, Merger Sub I will merge with and into Tiger Parent, with Tiger Parent surviving the Corporate Merger, and Tiger Parent will merge with and into Merger Sub II, with Merger Sub II surviving the LLC Merger as a wholly owned subsidiary of SYNNEX, the Merger Agreement attached as Annex A (this proposal is referred to as the “Merger Agreement Proposal”);

 

   

A proposal to approve, for the purpose of complying with the applicable provisions of NYSE Listing Rule 312.03 requiring stockholder approval of any issuance of securities that will have voting power of 20% or more of SYNNEX’ currently outstanding voting power, the issuance of an aggregate of 44 million shares of SYNNEX common stock in connection with the Merger (this proposal is referred to as the “Share Issuance Proposal”);

 

   

A proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to increase the number of authorized shares of SYNNEX common stock thereunder from 100 million shares to 200 million shares, the form attached as Annex B (this proposal is referred to as the “Authorized Share Charter Amendment Proposal”);

 

   

A proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to waive the corporate opportunity doctrine with respect to certain directors and certain other parties, the form attached as Annex C (this proposal is referred to as the “Corporate Opportunity Charter Amendment Proposal”); and

 

   

A proposal to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies (this proposal is referred to as the “Adjournment Proposal”).

Recommendation of the Board

The Board carefully reviewed and considered the terms and conditions of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement. By a unanimous vote, the Board (i) determined that the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, are fair to, and in the best interests of, SYNNEX and SYNNEX’ stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, on the terms and subject to the conditions set forth in the Merger

 

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Agreement, (iii) directed that the Merger Agreement, the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation of SYNNEX be submitted to SYNNEX’ stockholders for their approval, and (iv) resolved to recommend that the stockholders of SYNNEX adopt the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation on the terms and subject to the conditions set forth in the Merger Agreement.

Accordingly, the Board unanimously recommends a vote “FOR” the Merger Agreement Proposal, “FOR” the Share Issuance Proposal, “FOR” the Authorized Share Charter Amendment Proposal, “FOR” the Corporate Opportunity Charter Amendment Proposal, and “FOR” the Adjournment Proposal.

Record Date and Quorum

Each holder of record of shares of SYNNEX common stock as of the close of business on June 8, 2021, which is the record date for the special meeting, is entitled to receive notice of, and to vote at, the special meeting. You will be entitled to one vote for each share of SYNNEX common stock that you owned on the record date. As of June 8, 2021, there were 51,921,692 shares of SYNNEX common stock issued and outstanding and entitled to vote at the special meeting. The presence at the special meeting, by attendance via the virtual meeting website or by proxy, of the holders of shares of SYNNEX common stock representing a majority of the votes which all holders of shares of SYNNEX common stock are entitled to cast constitutes a quorum for the special meeting.

If you are a stockholder of record of SYNNEX and you vote by mail, by telephone or through the internet or at the special meeting via the virtual meeting website, then your shares of SYNNEX common stock will be counted as part of the quorum. If you are a “street name” holder of shares of SYNNEX common stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. If you are a “street name” holder of shares of SYNNEX common stock and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.

All shares of SYNNEX common stock held by stockholders of record that are present at the special meeting via the virtual meeting website or represented by proxy and entitled to vote at the special meeting, regardless of how such shares are voted or whether such stockholders abstain from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned.

Vote Required for Approval

Merger Agreement Proposal. For the proposal to adopt the Merger Agreement, the Board is requesting the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock (meaning that of the outstanding shares of common stock, a majority of them have be voted “for” the proposal).

Share Issuance Proposal. The proposal to approve the issuance of 44 million shares of SYNNEX common stock in connection with the Merger requires the affirmative vote of a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, and entitled to vote on such matter. This means that of the shares represented at the meeting and entitled to vote, a majority of them must be voted “for” the proposal for it to be approved.

Authorized Share Charter Amendment Proposal. The proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to increase the number of authorized shares of SYNNEX common stock requires the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock. This means that of the outstanding shares of common stock, a majority of them must be voted “for” the proposal for it to be approved.

 

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Corporate Opportunity Charter Amendment Proposal. The proposal to adopt an amendment to the SYNNEX Certificate of Incorporation, pursuant to which SYNNEX shall waive the corporate opportunity doctrine with respect to certain directors and certain other parties requires the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock. This means that of the outstanding shares of common stock, a majority of them must be voted “for” the proposal for it to be approved.

Adjournment Proposal. The approval of the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter. This means that of the shares represented at the meeting and entitled to vote, a majority of them must be voted “for” the proposal for it to be approved. In addition, even if a quorum is not present at the special meeting, the affirmative vote of shares representing a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter may adjourn the special meeting to a later date and time.

Effect of Abstentions; Broker Non-Votes

For the Merger Agreement Proposal, the Board is requesting the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock. Therefore, abstentions will have the same effect as a vote “AGAINST” the proposal.

The Share Issuance Proposal requires the affirmative vote of a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter. Therefore, abstentions will have the same effect as a vote “AGAINST” the proposal.

The Authorized Share Charter Amendment Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock. Therefore, abstentions will have the same effect as a vote “AGAINST” the proposal.

The Corporate Opportunity Charter Amendment Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock. Therefore, abstentions will have the same effect as a vote “AGAINST” the proposal.

The Adjournment Proposal requires the affirmative vote of a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter. Therefore, abstentions from voting will have the same effect as a vote “AGAINST” the proposal. In addition, even if a quorum is not present at the special meeting, the affirmative vote of shares representing a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter may adjourn the special meeting to a later date and time.

A broker non-vote with respect to SYNNEX common stock occurs when (i) shares of SYNNEX common stock held by a broker or other nominee are represented, in person or by proxy, at a meeting of SYNNEX’ stockholders, (ii) the bank, broker or other nominee has not received voting instructions from the beneficial owner on a particular proposal and (iii) the bank, broker or other nominee does not have the discretion to direct the voting of the shares of SYNNEX common stock on a particular proposal but has discretionary voting power on other proposals. A bank, broker, trust or other nominee may exercise discretion in voting on routine matters but may not exercise discretion and therefore will not vote on non-routine matters if instructions are not given.

Under applicable stock exchange rules, all of the proposals in this proxy statement are non-routine matters. As a result, there will not be any broker non-votes at the special meeting.

 

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Accordingly, if your shares of SYNNEX common stock are held in “street name,” a bank, broker, trust or other nominee will NOT be able to vote your shares, and your shares will not be counted in determining the presence of a quorum unless you have properly instructed your bank, broker, trust or other nominee on how to vote. Because the approval of each of (1) the Merger Agreement Proposal, (2) the Authorized Share Charter Amendment Proposal and (3) the Corporate Opportunity Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares of SYNNEX common stock, the failure to provide your bank, broker, trust or other nominee with voting instructions will have the same effect as a vote “AGAINST” the Merger Agreement Proposal, the Authorized Share Charter Amendment Proposal, and the Corporate Opportunity Charter Amendment Proposal. Because the approval of each of (a) the Share Issuance Proposal and (b) the Adjournment Proposal requires the affirmative vote of shares representing a majority of the shares present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter, and because your bank, broker, trust or other nominee does not have discretionary authority to vote on such proposal, the failure to provide your bank, broker, trust or other nominee with voting instructions will have no effect on approval of those proposals.

How to Vote

Stockholders have a choice of voting by proxy by completing a proxy card and mailing it in the prepaid envelope provided, by calling a toll-free telephone number or through the internet. Please refer to your proxy card or the information forwarded by your bank, broker, trust or other nominee to see which options are available to you. The telephone and internet voting facilities for stockholders of record will close at 11:59 p.m., Eastern Time on June 29, 2021.

If you submit your proxy by mail, by telephone or through the internet voting procedures, but do not include “FOR,” “AGAINST” or “ABSTAIN” on a proposal to be voted, your shares will be voted in favor of that proposal. If you indicate “ABSTAIN” on a proposal to be voted, it will have the same effect as a vote “AGAINST” that proposal. If you wish to vote by proxy and your shares are held by a bank, broker, trust or other nominee, you must follow the voting instructions provided to you by your bank, broker, trust or other nominee. Unless you give your bank, broker, trust or other nominee instructions on how to vote your shares of SYNNEX common stock, your bank, broker, trust or other nominee will not be able to vote your shares on the proposals.

If you wish to vote by attending the special meeting via the virtual meeting website and your shares are held in the name of a bank, broker or other holder of record, you must obtain a legal proxy, executed in your favor, from the bank, broker or other holder of record authorizing you to vote at the special meeting. Obtaining a legal proxy may take several days.

If you do not submit a proxy or otherwise vote your shares of SYNNEX common stock in any of the ways described above, it will have the same effect as a vote “AGAINST” the Merger Agreement Proposal, the Authorized Share Charter Amendment Proposal and the Corporate Opportunity Charter Amendment Proposal, but will have no effect on the approval of the Share Issuance Proposal or the Adjournment Proposal.

Revocation of Proxies

Any proxy given by a stockholder of SYNNEX may be revoked at any time before it is voted at the special meeting by doing any of the following:

 

   

by submitting another proxy by telephone or through the internet, in accordance with the instructions on the proxy card;

 

   

by delivering a signed written notice of revocation bearing a date later than the date of the proxy to Corporate Secretary, SYNNEX Corporation, 44201 Nobel Drive, Fremont, California 94538, stating that the proxy is revoked;

 

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by submitting a later-dated proxy card relating to the same shares of SYNNEX common stock; or

 

   

by attending the special meeting via the virtual meeting website and voting at the meeting (your attendance at the special meeting will not, by itself, revoke your proxy; you must vote at the special meeting via the virtual meeting website).

“Street name” holders of shares of SYNNEX common stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies.

Adjournments and Postponements

Although it is not currently expected, the special meeting may be adjourned or postponed one or more times to a later day or time if necessary or appropriate, including to solicit additional proxies. Your shares of SYNNEX common stock will be voted on any adjournment proposal in accordance with the instructions indicated in your proxy or, if no instructions were provided, “FOR” the proposal.

If a quorum is present at the special meeting, the special meeting may be adjourned by the affirmative vote of a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter. In addition, even if a quorum is not present at the special meeting, the affirmative vote of shares representing a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter may adjourn the special meeting to a later date and time. In either case, the adjourned meeting may take place without further notice other than by an announcement made at the special meeting unless the adjournment is for more than thirty (30) days thereafter or, if, after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the special meeting. If a quorum is not present at the special meeting, or if a quorum is present at the special meeting but there are insufficient votes at the time of the special meeting to adopt the other proposals, then SYNNEX may seek to adjourn the special meeting. In addition, the Board may, after consultation with Tiger Parent, postpone the special meeting upon public announcement made prior to the date previously scheduled for the special meeting for the purpose of soliciting additional proxies or as otherwise permitted under the Merger Agreement.

Solicitation of Proxies

SYNNEX is paying the cost of printing and mailing proxy materials. In addition to the solicitation of proxies by mail, solicitation may be made by our directors, officers and other associates by personal interview, telephone, facsimile or electronic mail. No additional compensation will be paid to these persons for solicitation. At this time we have not engaged a proxy solicitor. If we do engage a proxy solicitor we will pay the customary costs associated with such engagement. We will reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation materials to beneficial owners of our common stock.

Technical Support

There will be technicians ready to assist you with any technical difficulties you may have accessing the special meeting live audio webcast. Please be sure to check in 15 minutes prior to the start of the meeting by 9:45 a.m., Pacific Time on the day of the meeting, so that any technical difficulties may be addressed before the special meeting live audio webcast begins. If you encounter any difficulties accessing the webcast during the check-in or meeting time, please email VirtualMeeting@viewproxy.com or call (866) 612-8937.

Questions and Additional Information

If you have more questions about the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact Liz Morali, Investor Relations, by phone at (510) 668-8436 or by email at ir@synnex.com.

 

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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

As discussed elsewhere in this proxy statement, SYNNEX’ stockholders will consider and vote on a proposal to adopt the Merger Agreement. You should carefully read this proxy statement in its entirety for more detailed information concerning the Merger Agreement and the Merger. In particular, you should read in its entirety the Merger Agreement, which is attached as Annex A to this proxy statement. In addition, see the sections entitled “The Merger” and “The Merger Agreement.”

The Board unanimously recommends that SYNNEX’ stockholders vote “FOR” the proposal to adopt the Merger Agreement.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of SYNNEX common stock represented by such proxy card will be voted “FOR” the proposal to adopt the Merger Agreement.

For the proposal to adopt the Merger Agreement, the Board is requesting the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock. This means that of the outstanding shares of common stock, a majority of them be voted “for” the proposal. Abstentions and broker non-votes will have the effect of a vote “AGAINST” this proposal.

 

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PROPOSAL 2: SHARE ISSUANCE PROPOSAL

Pursuant to NYSE Listing Rule 312.03, which requires stockholder approval of certain transactions that result in the issuance of 20% or more of the outstanding voting power before the issuance of stock or securities, SYNNEX is asking its stockholders to approve the issuance of an aggregate of 44 million shares of SYNNEX common stock in connection with the Merger. The SYNNEX common stock to be issued in connection with the Merger will not be registered under the Securities Act and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. SYNNEX is required to, within two business days after the closing of the Merger, file an automatically effective registration statement registering the resale of such shares.

The Board unanimously recommends that SYNNEX’ stockholders vote “FOR” the proposal to approve the issuance of 44 million shares of SYNNEX common stock in connection with the Merger.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of SYNNEX common stock represented by such proxy card will be voted “FOR” the proposal to approve the issuance of shares in connection with the Merger.

The approval of this proposal requires an affirmative vote of a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter. This means that of the shares represented at the meeting and entitled to vote, a majority of them must be voted “for” the proposal for it to be approved. Abstentions will have the same effect as a vote “AGAINST” this proposal, and broker non-votes will have no effect on the vote for this proposal.

 

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PROPOSAL 3: AUTHORIZED SHARE CHARTER AMENDMENT PROPOSAL

As discussed elsewhere in this proxy statement, SYNNEX’ stockholders will consider and vote on a proposal to adopt an amendment to the SYNNEX Certificate of Incorporation to increase the number of authorized shares from 105 million shares to 205 million shares, of which 200 million shares of the par value of $0.0001 each shall be common stock and 5 million shares of the par value of $0.001 each shall be preferred stock. The proposed amendment to the SYNNEX Certificate of Incorporation is attached as Annex B to this proxy statement.

The Board unanimously recommends that SYNNEX’ stockholders vote “FOR” the proposal to adopt the amendment to the SYNNEX Certificate of Incorporation to increase the number of authorized shares as set forth above.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of SYNNEX common stock represented by such proxy card will be voted “FOR” this proposal.

The approval of this proposal requires the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock. This means that of the outstanding shares of common stock, a majority of them must be voted “for” the proposal for it to be approved. Abstentions and broker non-votes will have the effect of a vote “AGAINST” this proposal.

 

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PROPOSAL 4: CORPORATE OPPORTUNITY CHARTER AMENDMENT PROPOSAL

As discussed elsewhere in this proxy statement, SYNNEX’ stockholders will consider and vote on a proposal to adopt an amendment to the SYNNEX Certificate of Incorporation, pursuant to which SYNNEX shall waive the corporate opportunity doctrine with respect to certain directors and certain other parties. The proposed amendment to the SYNNEX Certificate of Incorporation is attached as Annex C to this proxy statement.

The Board unanimously recommends that SYNNEX’ stockholders vote “FOR” the proposal to adopt the amendment to the SYNNEX Certificate of Incorporation to waive the corporate opportunity doctrine with respect to its directors and certain other parties.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of SYNNEX common stock represented by such proxy card will be voted “FOR” this proposal.

The approval of this proposal requires the affirmative vote of the holders of a majority of the outstanding shares of SYNNEX common stock. This means that of the outstanding shares of common stock, a majority of them must be voted “for” the proposal for it to be approved. Abstentions and broker non-votes will have the effect of a vote “AGAINST” this proposal.

 

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PROPOSAL 5: ADJOURNMENT PROPOSAL

SYNNEX’ stockholders may be asked to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies.

The Board unanimously recommends that stockholders vote “FOR” the proposal to adjourn the special meeting to a later date or time if necessary or appropriate, including to solicit additional proxies in favor of the other proposals if there are insufficient votes at the time of the special meeting.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of SYNNEX common stock represented by such proxy card will be voted “FOR” the proposal to adjourn the special meeting to a later date or time if necessary or appropriate.

The approval of the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter. This means that of the shares represented at the meeting and entitled to vote, a majority of them must be voted “for” the proposal for it to be approved. In addition, even if a quorum is not present at the special meeting, the affirmative vote of shares representing a majority of the shares of SYNNEX common stock present at the special meeting, whether via the virtual meeting website or represented by proxy, entitled to vote on such matter may adjourn the special meeting to a later date and time. Abstentions will have the same effect as a vote “AGAINST” this proposal, and broker non-votes will have no effect on the vote for this proposal.

 

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THE MERGER

Overview

SYNNEX entered into the Merger Agreement with Tiger Parent on March 22, 2021. Under the terms of the Merger Agreement, subject to the satisfaction or waiver of specified conditions, Merger Sub I will merge with and into Tiger Parent, with Tiger Parent surviving the Corporate Merger. Immediately following the Corporate Merger, Tiger Parent will merge with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of SYNNEX. The Board has determined that the Merger Agreement is fair to, and in the best interest of, SYNNEX and its stockholders and has approved and declared advisable the Merger Agreement and the transactions contemplated thereby.

If the Merger is completed, the aggregate consideration for the Merger in exchange for all the issued and outstanding Tiger Parent common shares will consist of (i) $1.61 billion in cash ($1.11 billion in cash after giving effect to the $500 million equity contribution by Tiger Holdings to Tiger Parent prior to the Effective Time) and (ii) 44 million shares of SYNNEX common stock, plus cash in lieu of any fractional shares of SYNNEX common stock, in each case, without interest (which we collectively refer to as the “Merger Consideration”). The SYNNEX common stock to be issued in connection with the Merger will not be registered under the Securities Act and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. SYNNEX is required to, within two business days after the closing of the Merger, file an automatically effective registration statement registering the resale of such shares.

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the Board, or the representatives of each company, their respective advisors or any other persons.

The Board, acting independently and with the advice of its management team, and in the ordinary course of business, reviews and assesses the operations, financial performance and industry conditions of SYNNEX in light of the current business and economic environment and in consideration of its long-term business strategy to enhance value for its stockholders. From time to time, the Board and SYNNEX’ management teams have evaluated and considered a variety of potential financial and strategic options in light of industry developments and changing economic and market conditions. The evaluations have included monitoring the financial performance and strategic transactions of others in SYNNEX’ industry, including Tech Data. Also, from time to time, members of SYNNEX’ management have met with others in the industry to discuss trends and developments in the IT distribution market.

On October 22, 2020, Rich Hume, the Chief Executive Officer of Tech Data, sent an email to Dennis Polk, the Chief Executive Officer of SYNNEX, requesting a meeting to discuss various matters relating to Tech Data and SYNNEX. The parties agreed to a telephonic meeting on November 4, 2020.

On November 4, 2020, Mr. Polk and Mr. Hume had a telephonic meeting and discussed general industry trends and the SYNNEX and Tech Data businesses generally, and Mr. Hume inquired whether SYNNEX might be interested in exploring a potential strategic transaction between SYNNEX and Tech Data. Mr. Polk responded that SYNNEX was open to exploring whether any strategic opportunities between the two companies would be beneficial to SYNNEX and its stockholders. At the end of the call, Mr. Hume said that he would meet with representatives of Apollo, the sole stockholder of Tech Data, to gauge their interest in such a transaction and would arrange a follow-up call between SYNNEX, Tech Data and Apollo.

 

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On November 13, 2020, Mr. Polk received an email from Mr. Hume requesting a follow-up call with representatives of Apollo to discuss a potential strategic transaction.

On November 20, 2020, following previous conversations with Mr. Murai regarding the outreach by Mr. Hume, Mr. Polk informed the full Board that he had been contacted by Tech Data about the potential strategic transaction.

On December 4, 2020, Mr. Polk, Mr. Hume and representatives of Apollo had a conference call and discussed general industry trends, strategic goals, recent developments in the IT distribution market, and recent transactions for SYNNEX, Tech Data and other competitors in the industry. The parties also discussed a potential strategic transaction and the structuring alternatives for such a transaction, including which company would be the surviving entity. At the end of the call, representatives of Apollo stated that they would undertake additional analysis regarding a potential transaction. Following the call, Mr. Polk provided the Board with an email summary of the discussion.

On December 16, 2020, Mr. Hume emailed Mr. Polk requesting a call. Mr. Polk responded that the parties should enter into a confidentiality agreement before continuing discussions.

On December 17, 2020, SYNNEX entered into a confidentiality and standstill agreement with Tech Data.

On December 21, 2020, Mr. Polk had a conference call with the Board to provide an update on the discussions with Tech Data and determine if the Board felt it was in the best interest of SYNNEX and its stockholders to continue to explore a potential deal. After discussion, the Board instructed management to continue exploring a potential transaction, conduct due diligence, and discuss terms.

On December 22, 2020, Mr. Polk, Mr. Hume and representatives of Apollo had a conference call and discussed a potential strategic transaction, including various deal structure alternatives such as an acquisition by SYNNEX of assets, an acquisition by SYNNEX of stock, a merger or a joint venture. The parties also discussed potential terms of a possible transaction, as well as corporate governance matters and other high-level implications of a potential transaction. The parties agreed to continue their discussions. Following the call, Mr. Polk provided the Board with a summary of the discussion.

On January 4, 2021, Mr. Hume sent Mr. Polk a non-binding indication of interest regarding a potential strategic transaction between SYNNEX and Tech Data whereby SYNNEX and Tech Data would combine in a merger with consideration to be issued by SYNNEX consisting of 51 million shares of SYNNEX common stock, the refinancing of all Tech Data material debt facilities and the payout of outstanding preferred units of Tiger Holdings. On January 4, 2021, the closing price of SYNNEX common stock was $80.40.

On January 5, 2021, the Board met via video conference to discuss a proposed strategic transaction between SYNNEX and Tech Data, discussing potential transaction structure, consideration to be exchanged, financing alternatives, Tech Data’s financial information, due diligence matters, integration, timing, strategy and potential synergies. The Board directed management of SYNNEX to continue discussions with Tech Data and to offer 40 million shares of SYNNEX common stock as consideration, along with the payout of Tiger Holdings’ preferred units and the debt assumption requested by Tech Data.

On January 6, 2021, Mr. Polk provided an update to the Board regarding the various discussion points from the prior day’s meeting.

On January 8, 2021, the independent members of the Board met after SYNNEX’ regularly scheduled Board meeting to discuss the potential transaction with Tech Data.

On January 13, 2021, representatives of Apollo and Tech Data responded with a counterproposal that included 46 million shares of SYNNEX common stock as consideration plus $1.61 billion payable by SYNNEX for the

 

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Tiger Holdings preferred units and the payout of existing Tech Data debt. On January 13, 2021, the closing price of SYNNEX common stock was $85.68. Later that day, Mr. Polk informed the Board of Tech Data’s counterproposal.

On January 14, 2021, the Board met via video conference to discuss the potential transaction between SYNNEX and Tech Data. SYNNEX’ management provided an overall update on the discussions to date, including Tech Data’s counterproposal of 46 million shares of SYNNEX common stock as consideration, plus $1.61 billion for the Tiger Holdings preferred units and the payoff of existing Tech Data debt. SYNNEX’ management reviewed Tech Data’s current and projected financial information including balance sheets, capital structure, income and cash flow statements, adjusted EBITDA, as currently measured by Tech Data, as well as other financial information that had been previously provided by Tech Data starting on January 21, 2021. Management also discussed the valuation of Tech Data based on information SYNNEX had been provided to date during due diligence and reviewed potential synergies if the companies were combined. The Board discussed other benefits of a potential transaction, including that a combined company may be able to obtain investment grade debt, thereby lowering the overall cost of debt to the combined company. The Board discussed retaining outside advisors and obtaining a fairness opinion in connection with the proposed transaction. The Board discussed the potential impact of a proposed transaction on corporate culture, employees, management composition and other integration matters, including potential management changes and board composition and discussed the anticipated timing of a potential deal, including due diligence, negotiating the transaction documents, the closing process and timeline, regulatory approvals and other potential closing conditions. The Board also discussed whether a proposed transaction would have an impact on the tax-free nature of the recently completed spin-off by SYNNEX of Concentrix Corporation. Following this discussion, the Board instructed management to offer 44 million shares of SYNNEX common stock as consideration and agree to Tech Data and Apollo’s proposal related to the preferred unit payout and debt assumption.

On January 16, 2021, Mr. Polk communicated to representatives of Tech Data and Apollo an offer of 44 million shares of SYNNEX common stock, along with the preferred unit payout and debt assumption presented by Tech Data and Apollo.

Beginning on January 18, 2021, various members of SYNNEX’ management met with various members of Tech Data’s management and representatives of Apollo to provide each other with additional information about their respective businesses and to discuss strategy, certain historical and projected financials, industry trends, and potential synergies and matters relating to integration in connection with a potential strategic transaction.

On January 20, 2021, various members of SYNNEX’ management, including Mr. Polk, met with various members of Tech Data’s management, including Mr. Hume, along with representatives of Apollo, to exchange respective business, management and financial information as context for the due diligence process.

On January 21, 2021, both SYNNEX and Tech Data began assembling diligence information to make available to a limited number of individuals representing the other party. Additionally, both SYNNEX’ management and Tech Data’s management started the process of identifying which diligence items should be made available on a limited access basis to a limited number of people through a separate data room. Population of the separate general data rooms of both SYNNEX and Tech Data continued through the entire Merger negotiation process until shortly before the execution of the Merger Agreement. Also on January 21, 2021, representatives of Wachtell, Lipton, Rosen & Katz (which we refer to as “Wachtell Lipton”), Tech Data’s and Apollo’s legal counsel, provided a draft of the Merger Agreement to representatives of SYNNEX’ external legal advisor, Pillsbury Winthrop Shaw Pittman (which we refer to as “Pillsbury”).

On January 22, 2021, representatives of Wachtell Lipton provided an initial draft of the Investor Rights Agreement and Voting Agreement to representatives of Pillsbury.

Between January 22, 2021 and February 4, 2021, representatives of SYNNEX consulted Pillsbury and discussed various matters included in the initial draft of the Merger Agreement.

 

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On January 23, 2021, SYNNEX’ management provided the Board with an email update on the status of the negotiations and due diligence related to the proposed transaction with Tech Data.

On February 1, 2021, both SYNNEX and Tech Data opened their data rooms to an additional group of select individuals representing the other party to further facilitate the due diligence process.

In early February 2021, SYNNEX began working with Citi on obtaining debt financing for the potential transaction. From then through signing of the Merger Agreement, SYNNEX engaged in ongoing discussions with Citi and negotiated the terms of the Bridge Commitment Letter with Citi for the Bridge Facility to finance the cash portion of the consideration payable in the proposed transaction.

On February 1, 2021, the Board met via video conference to discuss the potential transaction between SYNNEX and Tech Data, discussing the proposed timeline for the transaction, due diligence status, regulatory matters, news and information regarding Apollo’s management, and matters relating to a potential integration. SYNNEX’ management updated the Board with respect to financial matters relating to the proposed transaction, including budgets, purchase price negotiations, and potential synergies. SYNNEX’ management also provided a summary of the various high-level issues being negotiated in the Merger Agreement. The Board instructed management to continue negotiations.

On February 4, 2021, representatives of Pillsbury provided a revised draft of the Merger Agreement to representatives of Wachtell Lipton.

Between February 4, and February 8, 2021, representatives of SYNNEX and Pillsbury discussed various matters included in the initial drafts of the Voting Agreement and the Investor Rights Agreement.

On February 5, 2021, SYNNEX’ management updated the Board via email regarding the potential transaction timeline and the status of due diligence, transaction document negotiations, financing efforts and tax diligence related to the spin-off.

On February 7, 2021, representatives of Pillsbury provided comments on the draft Voting Agreement to representatives of Wachtell Lipton.

On February 9, 2021, representatives of Wachtell Lipton sent a Merger Agreement issues list to representatives of Pillsbury, noting various items for discussion including the structure of the deal, matters relating to fiduciary duties and non-solicitation with respect to alternative proposals, termination rights and termination fee, closing conditions, post-closing recourse, pre-closing matters, financing, regulatory efforts and representations and warranties. Following receipt of this list, representatives of Pillsbury met with representatives of SYNNEX to discuss the issues.

On February 10, 2021, Mr. Hume and David Vetter, Chief Legal Officer of Tech Data, Simon Leung of SYNNEX, and representatives of Apollo, Wachtell Lipton and Pillsbury discussed the issues list circulated on February 9, 2021. Also on February 10, 2021, a representative of SYNNEX contacted Duff & Phelps to discuss providing a fairness opinion in connection with the proposed transaction.

On February 11, 2021, representatives of Wachtell Lipton sent representatives of Pillsbury a revised issues list, noting various items remaining open for discussion between the parties, including matters relating to fiduciary duties, termination rights and termination fee, closing conditions, post-closing recourse, pre-closing matters, financing, regulatory efforts and representations and warranties.

Additionally on February 11, 2021, February 16, 2021 and February 17, 2021 various members of the Board met in person or by videoconference with Mr. Hume and/or representatives of Apollo as part of the due diligence by the Board.

 

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On February 12, 2021, representatives of Wachtell Lipton and Pillsbury had a call to discuss various business and legal matters on the issues list circulated on February 11, 2021, and thereafter representatives of Wachtell Lipton circulated an updated issues list on February 13, 2021.

On February 12, 2021, SYNNEX’ management updated the Board via email regarding the potential transaction timeline and the status of due diligence, transaction document negotiations and outstanding issues, financing efforts and communications planning.

On February 14, 2021, representatives of Pillsbury met with SYNNEX to discuss the issues list, and thereafter sent a revised issues list to representatives of Wachtell Lipton, noting various open items for discussion including matters relating to fiduciary duties, termination rights, termination fees, closing conditions, pre-closing matters, financing, regulatory efforts, representations and warranties, closing mechanics, corporate governance matters, and the inclusion of a corporate opportunity doctrine waiver in the SYNNEX Certificate of Incorporation.

On February 15, 2021, Duff & Phelps provided SYNNEX with a proposed engagement letter for provision by Duff & Phelps of a fairness opinion in connection with the proposed transaction.

On February 16, 2021, SYNNEX’ management updated the Board via email regarding the financing negotiations in anticipation of the February 18, 2021 Board meeting.

On February 17, 2021, representatives of Pillsbury sent comments to the Investors Rights Agreement to representatives of Wachtell Lipton.

On February 18, 2021, the Board met via video conference to discuss the potential strategic transaction between SYNNEX and Tech Data. SYNNEX’ management reviewed the timeline for the proposed transaction, provided a financial analysis and transaction summary, discussed synergies and estimated deal costs, and provided an update on certain diligence matters, including recent distributions to Tiger Holdings and redemptions of certain Tiger Holdings units paid by Tech Data. Following this, the Board discussed the various matters presented by management, including whether there should be a renegotiation of the consideration proposed in the transaction. The Board also discussed costs associated with the potential transaction, including costs associated with engaging advisors and the possibility of refinancing SYNNEX’ debt and other financing alternatives. The Board reviewed the status of the transaction document negotiations, the due diligence reports from management, various risks associated with the potential transaction, post-closing integration matters and the risks associated with having one stockholder controlling a significant portion of SYNNEX’ stock, including whether to place restrictions on Apollo’s ability to sell SYNNEX’ stock after the closing of the Merger. The Board discussed Apollo’s statements that it would not agree to any such limits and that permitting Apollo to sell down over time could be beneficial for the public float of SYNNEX common stock. The Board also reviewed the Duff & Phelps engagement letter. Following discussion, the Board instructed management to enter into the engagement letter with Duff & Phelps.

On February 18, 2021, SYNNEX entered into an engagement letter with Duff & Phelps.

On February 19, 2021, representatives of Wachtell Lipton circulated a revised Merger Agreement and Voting Agreement, and on February 21, 2021, sent comments on the Investor Rights Agreement, including as to composition of the Board, registration rights, and certain other matters.

Between February 20, 2021 and February 28, 2021, representatives of Pillsbury discussed the revised Merger Agreement and open issues contained therein, as well as the open issues in the Voting Agreement and Investor Rights Agreement with various members of management at SYNNEX.

On February 23, 2021, the Board met via video conference to discuss the potential strategic transaction between SYNNEX and Tech Data. SYNNEX’ management discussed certain integration matters related to information

 

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technology and global footprint, and reviewed certain financial information relating to the transaction, including updates with respect to recent distribution payments made to Tiger Holdings and redemptions of Tiger Holdings units. Following this, the Board discussed various matters relating to the transaction, including whether the purchase price should be renegotiated.

On February 24, 2021, the Board met via video conference to discuss the potential transaction between SYNNEX and Tech Data, discussing the proposed purchase price renegotiation, synergies of the transaction, and potential next steps. Also on February 24, 2021, representatives of Tech Data and Apollo provided representatives of SYNNEX with updates to the Tech Data financial information that had been provided on January 20, 2021, such updates which showed an improvement to Tech Data’s financial forecasts.

On February 28, 2021, representatives of Pillsbury sent an updated issues list to representatives of Wachtell Lipton, noting that matters in the Merger Agreement related to closing mechanics, terms of exchange, corporate governance regulatory efforts, termination rights and termination fee, tax, closing conditions and remedies remained open. The issues list also set forth the business issues on the Investor Rights Agreement including the composition of the Board, registration rights, the inclusion of a corporate opportunity doctrine waiver in the SYNNEX Certificate of Incorporation and certain other matters.

On February 28, 2021, Mr. Polk sent an update to the Board regarding certain diligence and integration matters.

On March 2, 2021, the Board met via video conference to discuss the potential strategic transaction between SYNNEX and Tech Data. SYNNEX’ management provided an update on the open issues, including regulatory efforts, termination rights and termination fee, tax, closing conditions, remedies, composition of the Board post-closing and registration rights. SYNNEX’ management also reviewed certain financial information related to the transaction and provided an update on diligence matters and discussions regarding the potential renegotiation of the purchase price. The Board discussed the proposed transaction, the purchase price and other outstanding issues. The Board also discussed the composition of the Board following the transaction and potential changes in management.

On March 3, 2021, Messrs. Polk and Leung of SYNNEX, Messrs. Hume and Vetter of Tech Data, and representatives of Apollo, Pillsbury and Wachtell Lipton had a call to discuss outstanding matters related to the transaction, including the termination fee.

On March 4, 2021, Messrs. Polk and Leung of SYNNEX, Messrs. Hume and Vetter of Tech Data, and representatives of Apollo, Pillsbury and Wachtell Lipton had a call to discuss business issues outstanding, including closing mechanics, terms of exchange, corporate governance, regulatory efforts, termination rights and termination fee, tax, closing conditions, remedies and the inclusion of a corporate opportunity doctrine waiver in the SYNNEX Certificate of Incorporation. Following this meeting, representatives of Wachtell Lipton sent an updated issues list to representatives of Pillsbury, and representatives of Pillsbury and Wachtell Lipton discussed various legal matters in the Merger Agreement and Investor Rights Agreement, including certain definitions, corporate governance matters, representations and warranties and board composition matters.

On March 5, 2021, Messrs. Polk and Leung of SYNNEX, Messrs. Hume and Vetter of Tech Data, and representatives of Apollo, Pillsbury and Wachtell Lipton had a call to discuss business issues outstanding, including closing mechanics, terms of exchange, corporate governance regulatory efforts, termination rights and termination fee, tax, closing conditions and remedies.

On March 6, 2021, representatives of Pillsbury and Wachtell Lipton discussed various tax matters related to the proposed transaction, and representatives of Pillsbury sent a revised draft of the Merger Agreement to representatives of Wachtell Lipton.

 

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On March 8, 2021, representatives of Pillsbury sent comments to the Voting Agreement and Investor Rights Agreement to representatives of Wachtell Lipton, which included comments regarding transfer restrictions, board composition, information rights, registration rights and the inclusion of a corporate opportunity doctrine waiver in the SYNNEX Certificate of Incorporation.

On March 9, 2021, representatives of Wachtell Lipton sent a revised version of the Merger Agreement and Investor Rights Agreement to representatives of Pillsbury. Following this, representatives of Pillsbury and Wachtell Lipton discussed the open issues in these agreements, including, as to the Merger Agreement, certain definitions, terms of exchange, financing matters, representations and warranties, covenants, employee matters, regulatory efforts, and termination rights and termination fee, and as to the Investor Rights Agreement, transfer restrictions, board composition, information rights, and registration rights.

On March 10, 2021, representatives of Pillsbury sent an issues list for the Merger Agreement to Wachtell Lipton, and also a revised Investor Rights Agreement. Representatives of Wachtell Lipton and Pillsbury had a call later that day to discuss the issues on both documents.

Also on March 10, 2021, representatives of each of Tech Data and Apollo called Mr. Polk to propose that, in addition to the previously discussed purchase price of 44 million shares of SYNNEX common stock together with the $1.61 billion payout for outstanding preferred units of Tiger Holdings, Apollo make a $500 million equity contribution to Tech Data at the close of the transaction (which would result in a net cash payment for the outstanding preferred units to Tiger Holdings of $1.11 billion in the Merger).

From March 11, 2021 through March 14, 2021, various members of the Board at various times met in person or by videoconference with Mr. Hume and/or representatives of Apollo as part of due diligence by the Board.

On March 11, 2021, Dennis Polk and Simon Leung of SYNNEX, Rich Hume and David Vetter of Tech Data and representatives of Apollo, Pillsbury and Wachtell Lipton had a call to discuss business and legal matters remaining outstanding, including certain definitions, representations and warranties, covenants, employee matters, regulatory efforts, termination rights and fees, board composition, information rights and registration rights.

On March 11, 2021, the Board met via video conference to discuss the potential strategic transaction between SYNNEX and Tech Data. SYNNEX’ management provided the Board with an update on status of the purchase price negotiations, including that Apollo had offered to make a $500 million equity contribution to the combined company at the close of the transaction. SYNNEX’ management also provided an update on transaction timeline and process, and the status of the transaction documents and the outstanding business and legal matters therein, including certain definitions, representations and warranties, covenants, employee matters, regulatory efforts, termination rights and fees, board composition, information rights and registration rights. SYNNEX’ management also reviewed certain financial information related to Tech Data, and matters relating to antitrust, communications and diligence, including customer and vendor outreach. Following this the Board discussed the potential transaction, including the proposed $500 million investment by Apollo. The Board also discussed the appropriate composition of the Board following the potential transaction, including Apollo’s designation rights, and the termination fee and other outstanding issues in the transaction documents.

On March 12, 2021, representatives of Wachtell Lipton sent certain ancillary documents related to the Merger Agreement and an updated Investor Rights Agreement to representatives of Pillsbury.

On March 13, 2021, representatives of Pillsbury sent a consolidated issues list to representatives of Wachtell Lipton, reflecting the open issues including, certain representations and warranties, closing conditions, termination rights and fees, board composition, information rights, registration rights and charter amendment requirements.

 

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On March 16, 2021, representatives of Wachtell Lipton sent an initial draft of the Tech Data disclosure schedule to representatives of Pillsbury.

On March 15, 2021 and March 16, 2021, the Board met via video conference for its regularly scheduled board meetings. On both March 15 and March 16, the executives of SYNNEX presented the Board with updates on their diligence and discussions with Apollo and Tech Data.

At the meeting held on March 15, 2021, SYNNEX’ management presented on, and the Board discussed, the potential impact of the transaction, including as to operations, integration, corporate culture, synergies, global footprint, and product offerings. SYNNEX’ management also reviewed for the Board the approvals needed for the transaction, including stockholder approval and certain regulatory approvals, as well as the need for financing. The Board discussed with management the benefits and risks of the transaction, and the Board discussed the proposed composition for the Board following the closing and the appointment of the Apollo director designees.

At the meeting held on March 16, 2021, representatives of Pillsbury were in attendance for the meeting and representatives of Ernst & Young (which we refer to as “E&Y”) and Duff & Phelps were in attendance for the portions of the meeting where they presented to the Board. During the meeting, SYNNEX’ management provided the Board with an update on diligence and the outstanding issues in the transaction documents, including covenants, regulatory approvals, termination date, termination right and termination fee, scope of certain termination remedies, financing provisions, information rights, and board composition as set forth in the agreements relating to the transaction, and the Board reviewed and discussed the proposed transaction-related resolutions and documents, including the Merger Agreement, Voting Agreement, Investor Rights Agreement, and the Bridge Commitment Letter, which were provided to the directors prior to the meeting. SYNNEX’ management also provided an overview of the terms and provisions of the Merger Agreement, Investor Rights Agreement and Voting Agreement, and noted the closing price of SYNNEX common stock as of March 15, 2021, which was $104.95. SYNNEX’ management also reviewed the SYNNEX Projections, Tech Data Projections and Quarterly Information with the Board and discussed the recent stock price increase and the impact thereof on the transaction value. Representatives of Pillsbury discussed with the Board its fiduciary duties in connection with the proposed transaction. E&Y presented to the Board their analysis regarding the Merger and its impact on the tax-free nature of the spin-off of Concentrix. Duff & Phelps then reviewed its financial analysis of the Merger Consideration and delivered to the Board an oral opinion, which was confirmed by delivery of a written opinion dated March 16, 2021, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its opinion, the Merger Consideration to be paid in the Merger by SYNNEX, was fair, from a financial point of view, to SYNNEX and its stockholders. The Board discussed the information presented by SYNNEX’ management and its advisors, reviewed the competitive landscape and the standalone projections for SYNNEX and Tech Data and the potential synergies of a combined company, and risks and benefits of a strategic transaction, including changes in management and board composition and the potential that SYNNEX may have to pay a termination fee in certain instances. Additionally, the Board discussed certain closing conditions and covenants contained in the Merger Agreement, including an amendment to the SYNNEX Certificate of Incorporation to increase the authorized shares outstanding (in connection with the issuance of SYNNEX common stock as consideration in the Merger) and the inclusion of a corporate opportunity doctrine waiver (as requested by Apollo due to their business model). Following this discussion, the Board authorized management to finalize the terms of the transaction within the guidelines outlined by the Board and to pursue the resolution of the various diligence issues remaining outstanding. The Board also unanimously approved an exclusive forum amendment to its bylaws. Additionally, after discussion, including consideration of the factors described in the section “—Reasons for Recommending the Adoption of the Merger and the Merger Agreement,” the Board unanimously: (i) determined that the Merger Agreement and the transactions contemplated thereby, including the amendments to the Certificate of Incorporation of SYNNEX, the issuance of shares of SYNNEX common stock and the Merger, are fair to, and in the best interests of, SYNNEX and SYNNEX’ stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the amendments to the Certificate of Incorporation of SYNNEX, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, on the terms and subject to

 

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the conditions set forth in the Merger Agreement, (iii) approved entering into the Merger Agreement, subject to and upon final resolution of the outstanding issues and completion of certain customer diligence matters, each as directed by the Board to management, (iv) directed that the Merger Agreement, the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the Certificate of Incorporation of SYNNEX be submitted to SYNNEX’ stockholders for their approval, and (v) resolved to recommend that the stockholders of SYNNEX approve the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to SYNNEX Certificate of Incorporation on the terms and subject to the conditions set forth in the Merger Agreement.

On March 16, 2021, Mr. Polk and Mr. Hume met telephonically and reached agreement with respect to a variety of the outstanding issues, including various corporate governance matters.

On March 17, 2021, representatives of Wachtell Lipton and Pillsbury discussed outstanding issues including termination fee, certain representations, scope of certain termination remedies and the voting agreement. Later that day, representatives of Wachtell Lipton sent representatives of Pillsbury revised versions of the Merger Agreement and the Investor Rights Agreement.

On March 17, 2021, representatives of Pillsbury sent an initial draft of SYNNEX’ disclosure schedule to representatives of Wachtell Lipton.

On March 18, 2021, representatives of Wachtell Lipton and Pillsbury discussed outstanding issues including termination fee, certain representations, scope of certain termination remedies and the voting agreement. Later that day, representatives of Pillsbury sent representatives of Wachtell Lipton revised versions of the Merger Agreement and Investor Rights Agreement.

On March 19, 2021, members of SYNNEX’ management and Tech Data’s management, along with representatives of Apollo, Wachtell Lipton and Pillsbury held a “bring-down” diligence conference call. The closing price of SYNNEX common stock on March 19, 2021 was $103.20.

In the evening on March 19, 2021, the parties reached agreement on the final versions of the Merger Agreement, Investor Rights Agreement and Voting Agreement, and representatives of Wachtell Lipton sent an updated draft of Tech Data’s disclosure schedule and comments on SYNNEX’ disclosure schedule to representatives of Pillsbury. Additionally, representatives of Pillsbury sent an updated draft of SYNNEX’ disclosure schedule and comments on Tech Data’s disclosure schedule to representatives of Wachtell Lipton.

On March 20, 2021, Mr. Polk provided an update by email to the Board regarding open diligence items, recent discussions with members of the Tech Data management team and the results of customer and vendor outreach.

Between March 20, 2021 and March 21, 2021, representatives of Pillsbury and Wachtell Lipton exchanged versions of SYNNEX’ disclosure schedule and Tech Data’s disclosure schedule, which were each finalized on March 21, 2021.

On March 21, 2021, Duff & Phelps held a call with Mr. Leung of SYNNEX, and representatives of Pillsbury and provided a bring down of its fairness opinion as of such date.

On March 21, 2021, SYNNEX’ management updated the Board to confirm that the termination fee and other open items on the Merger Agreement had been resolved in accordance with the directions from the Board to management and the remaining diligence items had also been successfully completed.

On the morning of March 22, 2021, the parties exchanged signatures on the final versions of the Merger Agreement and Voting Agreement, and jointly announced the transaction. Concurrently with entering into the Merger Agreement, SYNNEX entered into the Bridge Commitment Letter with Citi.

 

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Recommendation of the Board

At a meeting of the Board on March 16, 2021, after careful consideration, including detailed discussions with SYNNEX’ management and its legal and financial advisors, the Board unanimously:

 

   

determined that the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, are fair to, and in the best interests of, SYNNEX and SYNNEX’ stockholders;

 

   

approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation, the issuance of shares of SYNNEX common stock in connection with the Merger, and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement;

 

   

approved entering into the Merger Agreement, subject to and upon final resolution of the outstanding issues and completion of certain customer diligence matters, each as directed by the Board to management;

 

   

directed that the Merger Agreement and the transactions contemplated thereby, including the amendments to the SYNNEX Certificate of Incorporation and the issuance of shares of SYNNEX common stock in connection with the Merger be submitted to SYNNEX’ stockholders for their approval; and

 

   

resolved to recommend that the holders of SYNNEX common stock adopt the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the issuance of shares of SYNNEX common stock in connection with the Merger and the amendments to the SYNNEX Certificate of Incorporation on the terms and subject to the conditions set forth in the Merger Agreement.

Accordingly, the Board unanimously recommends that SYNNEX’ stockholders vote “FOR” the Merger Agreement Proposal, “FOR” the Share Issuance Proposal, “FOR” the Authorized Share Charter Amendment Proposal, “FOR” the Corporate Opportunity Charter Amendment Proposal, and “FOR” the Adjournment Proposal.

Reasons for Recommending the Adoption of the Merger and the Merger Agreement

In arriving at this determination and recommendation, the Board as described in the section entitled “The Merger—Background of the Merger,” reviewed and discussed a significant amount of information, held a number of meetings, consulted with SYNNEX’ management, legal counsel and financial advisors and considered the business, assets and liabilities, results of operations, financial performance, strategic direction and prospects of SYNNEX and Tech Data and determined that the Merger was in the best interests of SYNNEX. The following are some of the significant factors that were considered by the Board and supported its decision to approve the Merger Agreement (not necessarily in order of relative importance):

Strategic Considerations. The Board believes that the Merger presents, and is expected to provide, a number of significant strategic opportunities and benefits to SYNNEX and its stockholders, including the following:

 

   

the belief that the Merger accelerates SYNNEX’ strategic growth initiatives versus what it could have done by acquiring several smaller and geographically dispersed companies over a longer period;

 

   

the expanded global footprint of the combined company will serve more than 100 countries across the Americas, Europe and Asia-Pacific regions, and have a broad, diversified portfolio of more than 200,000 product and solutions offerings;

 

   

the belief that the scale of the combined company will provide increased value and purchasing efficiencies to customers and vendors and enable it to accelerate technology adoption and attract the world’s most significant and innovative OEMs;

 

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the belief that the combination of each company’s core growth platforms will establish a differentiated end-to-end solutions portfolio and best-in-class product offerings in some of the largest, highest growth product segments including cloud, data centers, security, Internet of Things (IoT), services, 5G, and intelligent edge;

 

   

the expectation that SYNNEX’ and Tech Data’s complementary product line cards, vertical expertise, and global distribution platform will provide diversified revenue streams and cross selling opportunities, including the ability to bring a comprehensive everything-as-a-service (EaaS) offering to the market;

 

   

the expected ability of the combined company to benefit from significant financial strength to invest in its core growth platform as well as accelerate the pace of investments and innovation in next-generation cybersecurity, cloud, data, EaaS and IoT technologies;

 

   

the expectation that the Merger will result in a combined company with a strong balance sheet and strong revenue and earnings growth, including a forecasted 25% increase to non-GAAP diluted EPS in the first year following closing of the Merger;

 

   

the expectation that the combined company will generate approximately $200 million of net annual optimization and synergy savings benefits by the end of the second year following closing of the Merger;

 

   

the belief that the corporate cultural alignment between SYNNEX and Tech Data, including a focus on innovation, agility, and customer service, with shared principles, as well as the expertise and talent from both organizations, will support a smooth integration following the close of the Merger;

 

   

the potential benefits that SYNNEX and its stockholders would receive as a result of Apollo’s significant equity ownership and representation on the Board, including Apollo’s significant experience and expertise in the industry in which SYNNEX operates and in financial and business operations and management generally; and

 

   

the SYNNEX and Tech Data teams’ commitment to realizing the value of the Merger, and SYNNEX’ long track record of post-merger integration and de-leveraging.

Other Factors Considered by the Board. In addition to the strategic factors summarized above, the Board also considered the following factors in connection with its evaluation of the Merger, all of which it viewed as supporting its decision to approve the Merger and make its recommendations to SYNNEX’ stockholders:

 

   

the results of the due diligence investigation of Tech Data and its business, including with respect to legal, accounting, tax and human resources matters, conducted by SYNNEX and its advisors;

 

   

historical information concerning SYNNEX’ and Tech Data’s respective businesses, financial condition, results of operations, earnings, trading prices, technology positions, managements, competitive positions and prospects on a stand-alone basis and forecasted combined basis;

 

   

the review by the Board with its advisors of the structure of the Merger and the financial and other terms of the Merger Agreement;

 

   

the current and prospective business environments and industries in which SYNNEX and Tech Data operate, including international, national and local economic conditions, the competitive and regulatory environment, and the likely effect of these factors on SYNNEX and the combined company;

 

   

the support for the Merger received from SYNNEX’ customers and vendors;

 

   

the recommendation of SYNNEX’ senior management in favor of the Merger;

 

   

that SYNNEX’ stockholders will own approximately 55% of the common stock of the combined company upon completion of the Merger, with the remainder to be owned by Apollo;

 

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the agreed composition of the board of directors and certain senior management of the combined company, including that SYNNEX will initially appoint six of the 11 members of such board of directors, Dennis Polk, our Chief Executive Officer, will initially be the executive chair of the combined company, Rich Hume, the current Chief Executive Officer of Tech Data, will initially be the Chief Executive Officer and a board member of the combined company, and Apollo will appoint a number of directors to the board of the directors of the combined company depending on its ownership of the combined company (which shall initially be four directors);

 

   

the fact that SYNNEX’ stockholders must approve the Share Issuance Proposal and the Authorized Share Charter Amendment Proposal;

 

   

the agreement of the Major Stockholders to vote their shares in favor of the Merger; and

 

   

the terms of the Commitment Letter and the Bridge Facility thereunder, based on the then-current market for such commitments and facilities.

Opinion of Duff & Phelps, LLC. The Board considered the Opinion of Duff & Phelps to the effect that, as of the date of the Opinion and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in such Opinion, the consideration to be paid by SYNNEX in the Merger was fair, from a financial point of view, to SYNNEX and its stockholders, as more fully described in the section entitled “—Opinion of Duff & Phelps, LLC” and Annex F to this proxy statement.

Negotiations with Tech Data on the Merger Agreement. The Board considered that the terms and conditions of the Merger Agreement (which are described in more detail in the section of this proxy statement entitled “The Merger Agreement”), taken as a whole, including the parties’ representations, warranties and covenants, and the circumstances under which the Merger Agreement may be terminated, in its belief, are reasonable. The Board also reviewed and considered the conditions to the completion of the Merger, and concluded that while the completion of the Merger is subject to various regulatory approvals, such approvals were likely to be satisfied on a timely basis.

Timing of Completion. The Board considered the anticipated timing of the consummation of the transactions contemplated by the Merger Agreement and the structure of the transaction as a Merger and concluded that the Merger could be completed in a reasonable timeframe and in an orderly manner. The Board also considered that the potential for closing the Merger in a reasonable timeframe could reduce the period during which SYNNEX’ business would be subject to the potential uncertainty of closing and related disruption.

In the course of its deliberations, the Board also considered certain risks and other potentially negative factors concerning the transactions contemplated by the Merger Agreement, including:

 

   

the significant dilution associated with the stock issuance; the risk that the Merger might not be consummated in a timely manner or at all, as a result of a failure to satisfy certain conditions, including the approval by SYNNEX’ stockholders and the condition requiring the expiration or termination of the waiting period (or any extension thereof, including any agreement between a party and a governmental authority not to consummate the transaction before a certain date) under the HSR Act and the making or receipt, respectively, of certain required regulatory filings and consents;

 

   

the potential length of the regulatory approval process and the period of time during which SYNNEX may be subject to the Merger Agreement;

 

   

the possibility that governmental authorities might seek to require certain actions of SYNNEX or Tech Data or impose certain terms, conditions or limitations on SYNNEX’ or Tech Data’s businesses in connection with granting approval of the Merger or might otherwise seek to prevent or delay the Merger, including the risk that governmental authorities might seek an injunction;

 

   

the significant costs involved in connection with entering into and completing the Merger and the substantial time and effort of management required to complete the transactions contemplated by the

 

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Merger Agreement and the subsequent integration of the businesses, which may disrupt SYNNEX’ business operations;

 

   

the fact that SYNNEX will be subject to certain restrictions on the conduct of its businesses during the period between signing the Merger Agreement and completion of the Merger;

 

   

the risks and contingencies related to the announcement and pendency of the transactions contemplated by the Merger Agreement, including the impact on SYNNEX’ employees and its relationships with existing and prospective customers, suppliers and other third parties;

 

   

the requirement that SYNNEX pay Tiger Parent a termination fee of up to $131,683,200 if the Merger Agreement is terminated under certain circumstances;

 

   

the risk that the potential benefits of the Merger may not be fully realized, including the possibility that synergies, cost savings, growth opportunities and operating efficiencies expected to result from the Merger may not be realized to the extent or on the timeline expected, or at all;

 

   

the fact that SYNNEX intends to waive the corporate opportunity doctrine with respect to Apollo directors, subject to certain exceptions with respect to direct competitors of SYNNEX;

 

   

the risks inherent in the business of each of SYNNEX and Tech Data;

 

   

the risk that certain key members of senior management of SYNNEX or Tech Data might not choose to remain with the combined company;

 

   

changes in Board composition and potential changes in management;

 

   

the fact that Apollo may have significant influence on the combined company following the Merger, including an ability to effectively prevent actions that require approval of SYNNEX’ stockholders;

 

   

the fact that SYNNEX’ directors and executive officers may receive certain benefits that are different from, and in addition to, those of SYNNEX’ stockholders (See “The Merger—Interests of Directors and Executive Officers in the Merger”); and

 

   

the other risks described under “Risk Factors” (including those incorporated by reference in this proxy statement) and “Cautionary Statement Regarding Forward-Looking Statements.”

The Board considered all of these factors as a whole and, on balance, concluded that it supported a favorable determination to enter into the Merger Agreement.

The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive, but includes the material factors considered by the Board. In view of the wide variety of factors considered in connection with its evaluation of the Merger and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. In addition, individual directors may have given different weights to different factors. The Board did not undertake to make any specific determination as to whether, or to what extent, any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Board based its determination on the totality of the information presented, including the factors described above. The factors, potential risks and uncertainties contained in this explanation of SYNNEX’ consideration of the factors supporting the Merger and other information presented in this section contain information that is forward-looking in nature and, therefore, should be read in light of the factors discussed in “Cautionary Statement Regarding Forward-Looking Statements.”

Tech Data Historical Quarterly Information

In connection with the Merger, Tiger Parent provided certain historical quarterly information (which we refer to as the “Quarterly Information”) to SYNNEX. The Quarterly Information was provided to the Board in connection with its evaluation of the proposed transaction and to help the Board and SYNNEX’ management better understand the trends in Tech Data’s business.

 

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The following table presents a summary of the Quarterly Information (unaudited) for each of the quarters as listed below:

 

(Dollars in millions)

  Q1     Q2     Q3     Q4     FY’20     Q1     Q2     Q3     Q4     FY’21  

Tech Data revenue (consolidated)

  $ 8,406     $ 9,092     $ 9,119     $ 10,381     $ 36,998     $ 8,175     $ 8,229     $ 9,016     $ 10,952     $ 36,372  

Tech Data Adj. EBITDA (consolidated) (1)

  $ 169     $ 198     $ 195     $ 280     $ 843     $ 171     $ 179     $ 213     $ 296     $ 859  

(Dollars in millions)

  Q1     Q2     Q3     Q4     FY’20     Q1     Q2     Q3     Q4     FY’21  

Tech Data revenue (Americas)

  $ 3,789     $ 4,317     $ 4,202     $ 4,292     $ 16,600     $ 3,945     $ 3,711     $ 4,044     $ 4,212     $ 15,911  

Tech Data Adj. EBITDA (Americas) (1)

  $ 113     $ 127     $ 116     $ 126     $ 482     $ 106     $ 101     $ 121     $ 110     $ 439  

(Dollars in millions)

  Q1     Q2     Q3     Q4     FY’20     Q1     Q2     Q3     Q4     FY’21  

Tech Data revenue (EMEA)

  $ 4,310     $ 4,440     $ 4,622     $ 5,761     $ 19,132     $ 3,971     $ 4,244     $ 4,655     $ 6,300     $ 19,170  

Tech Data Adj. EBITDA (EMEA) (1)

  $ 52     $ 65     $ 75     $ 144     $ 336     $ 64     $ 71     $ 87     $ 176     $ 397  

(Dollars in millions)

  Q1     Q2     Q3     Q4     FY’20     Q1     Q2     Q3     Q4     FY’21  

Tech Data revenue (APAC)

  $ 308     $ 336     $ 294     $ 328     $ 1,266     $ 259     $ 274     $ 317     $ 440     $ 1,290  

Tech Data Adj. EBITDA (APAC) (1)

  $ 4     $ 6     $ 5     $ 10     $ 25     $ 2     $ 7     $ 5     $ 10     $ 23  

 

(1)

Adjusted EBITDA is a non-GAAP financial measure that Tech Data defines as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA excludes synergies, non-recurring expenses and stock-based compensation expense.

The Quarterly Information was not prepared with a view to public disclosure and is included in this proxy statement only because such information was provided to the Board in connection with its evaluation of the proposed transaction.

Certain SYNNEX Projections

SYNNEX Financial Projections

SYNNEX’ management does not as a matter of course publish detailed or long-term public forecasts or projections as to its future financial performance beyond the then current quarter due to the unpredictability of the underlying assumptions and estimates and uncertainty inherent in SYNNEX’ business. However, in connection with the evaluation of the Merger, SYNNEX’ management prepared certain unaudited long-term illustrative financial projections of SYNNEX for fiscal years 2021 through 2023 (which we collectively refer to as the “SYNNEX Financial Projections”). Such financial projections reflected SYNNEX’ management’s best estimates as to SYNNEX’ future performance and were on a stand-alone basis assuming SYNNEX would continue as an independent company without giving effect to the Merger. The SYNNEX Financial Projections were provided to the Board in connection with its evaluation of the proposed transaction and were also provided to Duff & Phelps for the purpose of their financial analyses and opinion, and SYNNEX directed Duff & Phelps to use and rely on the SYNNEX Financial Projections for such purpose, and such SYNNEX Financial Projections as were so provided to Duff & Phelps are referred to in the section of this proxy statement entitled “—Opinion of Duff & Phelps, LLC.”

 

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The SYNNEX Financial Projections were developed from historical financial statements and reflect numerous assumptions and estimates that SYNNEX’ management made in good faith at the time such financial projections were prepared, including, without limitation, as to industry performance, general business, economic, regulatory, market and financial conditions and other future events, and other factors described below in “—General.” These assumptions and estimates are predictions about the future, concern matters that may be beyond the control of SYNNEX, were made as of the date the SYNNEX Financial Projections were prepared, and may not be reflective of actual results, since the date such projections were prepared, now or in the future, in light of changed circumstances, economic conditions, or other developments.

The following table presents a summary of the SYNNEX Financial Projections (unaudited):

 

(Dollars in millions)

   FY2021E      FY2022E      FY2023E  

SYNNEX revenue

   $ 20,135      $ 19,824      $ 21,135  

SYNNEX Gross Profit

   $ 1,204      $ 1,205      $ 1,286  

SYNNEX Non-GAAP Operating Income (1)

   $ 613      $ 580      $ 632  

SYNNEX Non-GAAP Net Income (2)

   $ 406      $ 397      $ 430  

SYNNEX adjusted EBITDA (3)

   $ 633      $ 616      $ 669  

 

(1)

Non-GAAP Operating Income is a non-GAAP financial measure that SYNNEX’ management uses to monitor and evaluate the performance of SYNNEX. SYNNEX calculated Non-GAAP Operating Income as Operating Income less amortization of intangibles, transaction-related and integration expenses and stock-based compensation. Numbers may not add up due to rounding.

(2)

SYNNEX Non-GAAP Net Income is a non-GAAP financial measure that SYNNEX’ management uses to monitor and evaluate the performance of SYNNEX. SYNNEX calculated Non-GAAP Income as Net Income less amortization of intangibles, transaction-related and integration expenses and stock-based compensation. Numbers may not add up due to rounding.

(3)

SYNNEX adjusted EBITDA is a non-GAAP financial measure that SYNNEX management uses to monitor and evaluate the performance of SYNNEX. SYNNEX defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, and excludes acquisition-related and integration expenses, restructuring costs, the amortization of intangible assets and the related tax effects thereon. Numbers may not add up due to rounding.

The SYNNEX Financial Projections were not prepared with a view to public disclosure and are included in this proxy statement only because such information was provided to the Board and provided to Duff & Phelps for the purpose of its financial analyses and opinion.

Tech Data Financial Projections

In connection with the Merger, Tiger Parent provided certain unaudited Tech Data financial projections (which we refer to as the “Tech Data Projections”) to SYNNEX and to Duff & Phelps. To the knowledge of SYNNEX, the Tech Data Projections were prepared on a stand-alone basis assuming Tech Data would continue as an independent company without giving effect to the Merger. The Tech Data Projections were provided to the Board in connection with its evaluation of the proposed transaction and were also provided to Duff & Phelps for purposes of their financial analyses and opinion. SYNNEX directed Duff & Phelps to use and rely on the Tech Data Projections for such purpose, and such Tech Data Projections are referred to in the section of this proxy statement “—Opinion of Duff & Phelps, LLC.”

The following table presents a summary of the Tech Data Projections (unaudited) for each of the fiscal years ended January 31 as listed below:

 

(Dollars in millions)

   FY2022E      FY2023E      FY2024E  

Tech Data revenue

   $ 38,929      $ 40,132      $ 41,678  

Tech Data Adjusted EBITDA (including Tech Data’s GBO 2 Program) (1)

   $ 919      $ 1,045      $ 1,176  

 

(1)

Adjusted EBITDA is a non-GAAP financial measure that Tech Data defines as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA excludes SYNNEX’ post deal synergies and non-recurring expenses.

 

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Tech Data’s GBO 2 program is Tech Data’s Global Optimization Program initiated in fiscal 2021 that is intended to provide certain cumulative benefits to the Tech Data business and are included in the Tech Data Projections above. For more information see the section entitled “Index to Consolidated Financial Statements of Tiger Parent—Note 5—GBO 2 Program”. The following presents the projected cumulative Tech Data GBO 2 Program benefits as prepared by Tech Data:

 

(Dollars in millions)

   FY2022E      FY2023E      FY2024E  

Tech Data GBO 2 Cumulative Program Benefits

   $ 119      $ 207      $ 268  

The Tech Data Projections were not prepared with a view to public disclosure and are included in this proxy statement only because such information was provided to the Board in connection with its evaluation of the proposed transaction and were also provided to Duff & Phelps for the purpose of its financial analyses and opinion.

SYNNEX Adjusted Tech Data Projections

In connection with its evaluation of the Merger and the preparation of the SYNNEX synergies described below, SYNNEX made certain adjustments to the assumptions and estimates underlying the Tech Data Projections for fiscal years 2022 through 2024 (which we collectively refer to as the “SYNNEX Adjusted Tech Data Projections”). Such adjustments were made by SYNNEX’ management in light of, among other things, the due diligence SYNNEX conducted on Tech Data, certain macroeconomic, industry and competitive trends, as well as to reflect a more conservative view of Tech Data’s potential performance.

The SYNNEX Adjusted Tech Data Projections reflected SYNNEX’ management’s best estimates as to Tech Data’s future performance. The SYNNEX Adjusted Tech Data Projections were provided to the Board in connection with its evaluation of the proposed transaction and were also provided to Duff & Phelps for purposes of their financial analyses and opinion. SYNNEX directed Duff & Phelps to use and rely on the SYNNEX Adjusted Tech Data Projections for such purpose, and such SYNNEX Adjusted Tech Data Projections are referred to in the section of this proxy statement “—Opinion of Duff & Phelps, LLC.”

The following table presents a summary of the SYNNEX Adjusted Tech Data Projections (unaudited) for each of the fiscal years ended January 31 as listed below:

 

(Dollars in millions)

   FY2022E     FY2023E     FY2024E  

Tech Data Adjusted revenue

   $ 38,929     $ 40,132     $ 41,678  

Tech Data Adjusted EBITDA (1) (including Tech Data’s GBO 2 Program)

   $ 842     $ 949     $ 1,044  

Less Taxes

   $ (206   $ (235   $ (260

Less Capital Expenditures

   $ (100   $ (100   $ (100

Less Increase in Working Capital

   $ (33   $ (117   $ (73

Tech Data Adjusted free cash flow (2)

   $ 503     $ 498     $ 610  

 

(Dollars in millions)

   FY2022E      FY2023E      FY2024E  

Tech Data GBO 2 Cumulative Program Cost Savings

   $ 53      $ 110      $ 135  

 

(1)

Adjusted EBITDA is a non-GAAP financial measure and is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA excludes SYNNEX’ post deal synergies and non-recurring expenses. Adjusted EBITDA in the SYNNEX Adjusted Tech Data Projections was reduced by $56, $74, and $110 as a measure of conservatism, but includes stock-based compensation expense of $21, $22, and $22 for the fiscal year ending 2022, 2023 and 2024, respectively.

(2)

Adjusted free cash flow is a non-GAAP financial measure calculated as adjusted EBITDA, less taxes, less capital expenditures and less increase in working capital. Numbers may not add up due to rounding.

The SYNNEX Adjusted Tech Data Projections were not prepared with a view to public disclosure and are included in this proxy statement only because such information was provided to the Board in connection with its evaluation of the proposed transaction and were also provided to Duff & Phelps for the purpose of its financial analyses and opinion.

 

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SYNNEX Synergies

Additionally, in connection with its evaluation of the Merger, SYNNEX’ management prepared certain estimates of potential synergies anticipated by SYNNEX’ management to result from the Merger in the first three full years following the completion of the Merger and thereafter. These synergies were provided to the Board in connection with its evaluation of the proposed transaction and were also provided to Duff & Phelps for the purposes of their financial analyses and opinion. SYNNEX directed Duff & Phelps to use and rely on these synergies for such purpose, and such synergies are referred to in the section of this proxy statement “—Opinion of Duff & Phelps, LLC.”

The following table presents (on a pre-tax basis) a summary of the synergies estimated by SYNNEX management to result from the Merger that were provided to the Board and Duff & Phelps:

 

(Dollars in millions)

   Year 1      Year 2      Year 3  

Total cumulative transaction cost synergies

   $ 50.0      $ 100.0      $ 100.0  

Total transaction dis-synergies

   $ (20.0    $ (15.0    $ (10.0

Total cumulative net transaction synergies

   $ 30.0      $ 85.0      $ 90.0  

In addition, SYNNEX’ management prepared final estimates of total potential synergies of the combined business overall following the closing of the Merger, which are expected to be generated from the transaction cost synergies and cumulative GBO 2 Program cost savings. These estimates included $100 million in synergies by the end of Year 1 and $200 million in synergies by the end of Year 2. This information was provided to the Board in connection with its evaluation of the proposed transaction.

The estimated potential synergies resulting from the Merger and the potential synergies of the combined business overall following the Merger, as prepared by SYNNEX management, are referred to herein as the “SYNNEX Synergies”.

The SYNNEX Synergies reflect numerous assumptions and reflected SYNNEX’ management’s best estimates as to the potential synergies of a combined company, which SYNNEX made in good faith. The SYNNEX Synergies were not prepared with a view to public disclosure and are included in this proxy statement only because such information was provided, to the Board and, with respect to the potential synergies resulting from the Merger, to Duff & Phelps for the purpose of its financial analyses and opinion. The SYNNEX Synergies are not reflected in the SYNNEX financial projections or the SYNNEX Adjusted Tech Data Projections.

General

The SYNNEX Financial Projections, SYNNEX Adjusted Tech Data Projections, and SYNNEX Synergies (which we collectively refer to as the “SYNNEX Projections”), and the Tech Data Projections and Quarterly Information were prepared by SYNNEX’ management or Tech Data’s management for internal use and were not prepared with a view to public disclosure, nor were they prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of projections or generally accepted accounting principles. The SYNNEX Projections and Tech Data Projections are prospective and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement are cautioned not to place undue reliance on this prospective financial information. The SYNNEX Projections were prepared by, and are the responsibility of, SYNNEX’ management, and the Tech Data Projections were prepared by, and are the responsibility of, Tech Data’s management. No independent registered public accounting firm has audited, reviewed, examined, compiled, or applied any agreed-upon procedures with respect to the SYNNEX Projections or Tech Data Projections nor have they expressed any opinion or any other form of assurance on such information or its achievability. The reports of SYNNEX’ independent registered public accounting firm incorporated by reference into this proxy statement relate to SYNNEX’ historical financial information and does not extend to the SYNNEX Projections, nor should it be read to do so.

 

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While the SYNNEX Projections and Tech Data Projections are presented with numeric specificity, they reflect numerous assumptions and estimates that SYNNEX’ or Tech Data’s management made in good faith at the time such projections were prepared with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as the ability to achieve the projected synergies, the levels of information technology/consumer electronics and outsourced business services spending, competitive conditions in the industry and market acceptance of SYNNEX’ or Tech Data’s products and services. These assumptions and estimates are inherently uncertain, may be beyond the control of SYNNEX and Tech Data or any other person, were made as of the date the SYNNEX Projections or Tech Data Projections, respectively were prepared, and may not be reflective of actual results, either since the date such projections were prepared, now or in the future, in light of changed circumstances, economic conditions, or other developments.

Important factors that may affect actual results and cause the SYNNEX Projections and Tech Data Projections not to be achieved include risks and uncertainties relating to SYNNEX’ and Tech Data’s businesses, including their abilities to achieve their respective strategic goals, objectives, targets and cost savings over applicable periods, customer demand for products, successful and timely development of products, an evolving competitive landscape, rapid technological change, general business, economic and political conditions and other factors described under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” as well as the risk factors with respect to SYNNEX’ business contained in its most recent SEC filings, which readers are urged to review, which may be found as described under “Where You Can Find More Information.” In addition, the SYNNEX Projections and Tech Data Projections cover multiple future years, and such information by its nature is less reliable in predicting each successive year. The SYNNEX Projections and Tech Data Projections also do not take into account any circumstances or events occurring after the date on which they were prepared and do not give effect to the transactions contemplated by the Merger Agreement, including the Merger, and also do not take into account the effect of any failure of the Merger to be completed. The SYNNEX Projections and Tech Data Projections also reflect assumptions as to certain business decisions that are subject to change. As a result, actual results may differ materially from those contained in the SYNNEX Projections and Tech Data Projections. Accordingly, there can be no assurance that the SYNNEX Projections or Tech Data Projections will be realized or that actual results will not be significantly lower than projected. The SYNNEX Projections and Tech Data Projections are not included in this proxy statement to induce any stockholder to vote in favor of the Merger Agreement Proposal, Share Issuance Proposal, Authorized Share Charter Amendment Proposal, Corporate Opportunity Charter Amendment Proposal or Adjournment Proposal, or in favor of any other proposal.

The inclusion of the SYNNEX Projections and Tech Data Projections in this proxy statement should not be regarded as an indication that SYNNEX, Tech Data, or any of their respective affiliates, advisors or representatives considered the SYNNEX Projections or Tech Data Projections to be predictive of actual future events, and the SYNNEX Projections should not be relied on as such. Neither SYNNEX, Tech Data, nor any of their respective affiliates, advisors, officers, employees, directors or representatives can give you any assurance that actual results will not differ materially from the SYNNEX Projections and Tech Data Projections, and none of those persons undertakes any obligation to update or otherwise revise or reconcile the SYNNEX Projections or Tech Data Projections to reflect circumstances existing after the date such projections were prepared or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying such projections are shown to be in error. Neither SYNNEX nor Tech Data intend to publicly update or make any other revision to the SYNNEX Projections or Tech Data Projections. Neither SYNNEX nor Tech Data nor any of their respective affiliates, advisors, officers, employees, directors or representatives makes any representation to any stockholder of SYNNEX or any other person regarding SYNNEX’ and Tech Data’s ultimate performance compared to the SYNNEX Projections and Tech Data Projections or that the results reflected therein will be achieved. SYNNEX has not made any representation to Tech Data or Tiger Parent, in the Merger Agreement or otherwise, concerning the SYNNEX Projections. Tiger Parent has not made any representation to SYNNEX in the Merger Agreement or otherwise, concerning the Tech Data Projections. For the reasons described above, readers of this proxy statement are cautioned not to place undue, if any, reliance on the SYNNEX Projections and Tech Data Projections.

 

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The SYNNEX Projections, Tech Data Projections and Quarterly Information contain certain non-GAAP financial measures that SYNNEX or Tech Data believes are helpful in understanding past financial performance and future results. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures used by SYNNEX or Tech Data may not be comparable to similarly titled amounts used by other companies. No reconciliation of non-GAAP financial measures in the SYNNEX Projections and Tech Data Projections to GAAP measures were created or used in connection with preparing the SYNNEX Projections and Tech Data Projections, and there would be inherent difficulty in forecasting and quantifying the measures that would be necessary for such reconciliation.

Opinion of Duff & Phelps, LLC

On February 15, 2021, SYNNEX retained Duff & Phelps to serve as an independent financial advisor to the Board specifically to provide to the Board a fairness opinion in connection with the acquisition by SYNNEX of Tiger Parent for consideration paid to Tiger Holdings consisting of $1.61 billion in cash and 44 million shares of SYNNEX common stock. The $500 million equity contribution by Tiger Holdings to Tiger Parent is excluded when determining aggregate consideration. On March 16, 2021, Duff & Phelps delivered its Opinion, dated March 16, 2021, to the Board that, as of the date of the Opinion and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in such Opinion, the consideration to be paid by SYNNEX in the Merger was fair, from a financial point of view, to SYNNEX and its stockholders (without giving effect to any impact of the Merger on any particular stockholder other than in its capacity as a stockholder).

In selecting Duff & Phelps, SYNNEX considered, among other things, the fact that Duff & Phelps is a reputable investment banking firm with experience in the IT distribution sector and a global leader in providing fairness opinions to boards of directors. Duff & Phelps is continuously engaged in the valuation of businesses and their securities and the provision of fairness opinions in connection with various transactions.

The full text of the Opinion is attached hereto as Annex F and is incorporated into this document by reference. The summary of the Opinion set forth herein is qualified in its entirety by reference to the full text of the Opinion. The Opinion should be read carefully and in its entirety for a discussion of the procedures followed, assumptions made, other matters considered and limits of the review undertaken by Duff & Phelps in connection with such Opinion, as well as the qualifications contained therein.

Duff & Phelps’ Opinion was approved by its fairness committee. The Opinion was provided for the information of, and directed to, the Board for its information and assistance in connection with its consideration of the financial terms of the Merger.

In connection with its Opinion, Duff & Phelps made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances to enable it to render its Opinion. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation in general, and with respect to similar transactions in particular. Duff & Phelps’ procedures, investigations and financial analyses with respect to the preparation of its Opinion included, but were not limited to, the items summarized below:

 

   

reviewed SYNNEX’ annual report and audited financial statements on Form 10-K filed with the SEC for the fiscal years ended November 30, 2019 and 2020;

 

   

reviewed Tech Data’s annual report and draft financial statements for the fiscal year ended January 31, 2021, Tech Data’s annual report and audited financial statements on Form 10-K filed with the SEC for the fiscal year ended January 31, 2020, Tech Data’s quarterly reports and unaudited financial statements for the three month periods ended July 31, 2020, October 31, 2020 and January 31, 2021;

 

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reviewed unaudited segment and pro forma financial information for Tech Data for the fiscal year ended January 31, 2021, which Tech Data’s management identified as being the most current financial statements available;

 

   

reviewed financial projections for Tech Data prepared by Tech Data’s management and also those as adjusted by SYNNEX’ management, each for the fiscal years ended January 31, 2022 through 2024, including potential synergies prepared by management of SYNNEX, provided to Duff & Phelps by management of SYNNEX;

 

   

reviewed financial projections for SYNNEX for the fiscal years November 30, 2021 through 2023, provided to Duff & Phelps by management of SYNNEX;

 

   

reviewed the Rating Agency Presentation dated February 8, 2021;

 

   

reviewed the Diligence Discussion Materials Presentation dated January 2021;

 

   

reviewed other internal documents relating to the history, current operations, and probable future outlook of SYNNEX and Tech Data provided to us by management of SYNNEX; and

 

   

reviewed documents related to the Merger, including the draft dated March 9, 2021 of the Merger Agreement;

 

   

discussed the information referred to above and the background and other elements of the Merger with the management of SYNNEX and management of Tech Data;

 

   

reviewed the historical trading price and trading volume of SYNNEX common stock, and the publicly traded securities of certain other companies that Duff & Phelps deemed relevant;

 

   

performed certain valuation and comparative analyses using generally accepted valuation and analytical techniques including a discounted cash flow analysis, an analysis of selected public companies that Duff & Phelps deemed relevant, and an analysis of selected transactions that Duff & Phelps deemed relevant; and

 

   

conducted such other analyses and considered such other factors as Duff & Phelps deemed appropriate.

In performing its analyses and rendering its Opinion with respect to the Merger, Duff & Phelps, with SYNNEX’ consent:

 

   

Relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including SYNNEX’ management and Tech Data’s management, and did not independently verify such information;

 

   

Relied upon the fact that the Board and SYNNEX had been advised by counsel as to all legal matters with respect to the Merger, including whether all procedures required by law to be taken in connection with the Merger had been duly, validly and timely taken;

 

   

Assumed that any estimates, evaluations, forecasts and projections furnished to Duff & Phelps were reasonably prepared and based upon the best currently available information and good faith judgment of the person furnishing the same, and Duff & Phelps expressed no opinion with respect to such projections or the underlying assumptions;

 

   

Assumed that information supplied and representations made by SYNNEX’ management and Tech Data’s management were substantially accurate regarding SYNNEX, Tech Data, and the Merger;

 

   

Assumed that the representations and warranties made in the Merger Agreement are substantially accurate;

 

   

Assumed that the final versions of all documents reviewed by Duff & Phelps in draft form conformed in all material respects to the drafts reviewed;

 

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Assumed that there had been no material change in the assets, liabilities, financial condition, results of operations, business, or prospects of SYNNEX or Tech Data since the date of the most recent financial statements and other information made available to Duff & Phelps, and that there was no information or facts that would make the information reviewed by Duff & Phelps incomplete or misleading;

 

   

Assumed that all of the conditions required to implement the Merger would be satisfied and that the Merger would be completed substantially in accordance with the Merger Agreement without any amendments thereto or any waivers of any terms or conditions thereof; and

 

   

Assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger would be obtained without any adverse effect on SYNNEX, Tech Data, or the contemplated benefits expected to be derived in the Merger.

To the extent that any of the foregoing assumptions or any of the facts on which the Opinion was based prove to be untrue in any material respect, Duff & Phelps’ Opinion cannot and should not be relied upon. Furthermore, in Duff & Phelps’ analysis and in connection with the preparation of its Opinion, Duff & Phelps made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Merger.

Duff & Phelps prepared its Opinion effective as of the date thereof. Its Opinion was necessarily based upon market, economic, financial and other conditions as they existed and could be evaluated as of the date thereof, and Duff & Phelps disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its Opinion which may come or be brought to the attention of Duff & Phelps after the date thereof.

Duff & Phelps did not evaluate Tech Data’s solvency or conduct an independent appraisal or physical inspection of any of Tech Data’s specific assets or liabilities (contingent or otherwise). Duff & Phelps was not requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Merger, the assets, businesses or operations of Tech Data, or any alternatives to the Merger, (ii) negotiate the terms of the Merger, and therefore, Duff & Phelps assumed that such terms were the most beneficial terms, from SYNNEX’ perspective, that could, under the circumstances, be negotiated among the parties to the Merger Agreement and the Merger, or (iii) advise the Board or any other party with respect to alternatives to the Merger.

Duff & Phelps was not expressing any opinion as to the market price or value of SYNNEX common stock (or anything else) after the announcement or the consummation of the Merger. Duff & Phelps’ Opinion should not be construed as a valuation opinion, a credit rating, a solvency opinion, an analysis of Tech Data’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps did not make, and assumed no responsibility to make, any representation, or render any opinion, as to any legal matter.

In rendering its Opinion, Duff & Phelps was not expressing any opinion with respect to the amount or nature of any compensation to any of SYNNEX’ or Tech Data’s officers, directors, or employees, or any class of such persons, relative to the consideration to be paid by SYNNEX in the Merger, or with respect to the fairness of any such compensation.

Duff & Phelps’ Opinion was furnished solely for the use and benefit of the Board in connection with its consideration of the Merger and was not intended to, and did not and does not, confer any rights or remedies upon any other person, and was not and is not intended to be used, and may not be used, by any other person or for any other purpose, without Duff & Phelps’ express consent. Duff & Phelps has consented to the inclusion of the Opinion in its entirety and the description hereof in this proxy statement and any other filing SYNNEX is required to make with the SEC in connection with the Merger if such inclusion is required by the applicable law. The Opinion (i) did not address the merits of the underlying business decision to enter into the Merger versus any alternative strategy or transaction; (ii) did not address any transaction related to the Merger; (iii) was not a recommendation as to how the Board or any stockholder should vote or act with respect to any matters relating to

 

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the Merger, or whether to proceed with the Merger or any related transaction; and (iv) did not indicate that the consideration paid is the best possibly attainable under any circumstances; instead, it merely stated whether the consideration in the Merger was within a range suggested by certain financial analyses. The decision as to whether to proceed with the Merger or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which the Opinion was based. Duff & Phelps’ Opinion should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party.

Set forth below is a summary of the material analyses performed by Duff & Phelps in connection with the delivery of its Opinion to the Board. This summary is qualified in its entirety by reference to the full text of the Opinion, attached hereto as Annex F. While this summary describes the analyses and factors that Duff & Phelps deemed material in its presentation to the Board, it is not a comprehensive description of all analyses and factors considered by Duff & Phelps. The preparation of a fairness opinion is a complex process that involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis. In arriving at its Opinion, Duff & Phelps did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Duff & Phelps believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it in rendering the Opinion without considering all analyses and factors could create a misleading or incomplete view of the evaluation process underlying its Opinion. The conclusion reached by Duff & Phelps was based on all analyses and factors taken as a whole, and also on the application of Duff & Phelps’ own experience and judgment.

The financial analyses summarized below include information presented in tabular format. In order for Duff & Phelps’ financial analyses to be fully understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Duff & Phelps’ financial analyses

Valuation Methodologies

Income Approach (Discounted Cash Flow Analysis)

The Income Approach is a valuation technique that provides an estimation of the fair market value of an asset (or business) based on the cash flows that an asset (or business) can be expected to generate over its remaining useful life. The Income Approach begins with an estimation of the annual cash flows a market participant would expect the subject asset (or business) to generate over a discrete projection period. The estimated cash flows for each of the years in the discrete projection period are then converted to their present value equivalents using a rate of return appropriate for the risk of achieving the projected cash flows. The present value of the estimated cash flows are then added to the present value equivalent of the residual/terminal value of the asset (if any) or the business at the end of the discrete projection period to arrive at an estimate of fair market value.

For business valuations, the Income Approach is typically applied through a Discounted Cash Flow (which we refer to as “DCF”) analysis. Under the DCF analysis, the valuation is based on the present value of estimated future cash flows for the expected life of the asset (or business) discounted at a rate of return that considers the relative risk of achieving those cash flows and the time value of money.

Market Approach (Selected Public Companies / Selected M&A Transactions Analysis)

The Market Approach is a valuation technique that provides an estimation of fair market value based on market prices in actual transactions and on asking prices for assets (or businesses). The valuation process is a comparison and correlation between the subject asset (or business) and other similar assets (or businesses). Considerations such as time and condition of sale and terms of agreements are analyzed for comparable assets and are adjusted to arrive at an estimation of the fair market value of the subject asset.

 

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Valuation Methodologies Utilized

In applying the Income Approach, Duff & Phelps relied on the financial projections, as prepared by Tech Data’s management and reviewed, adjusted and provided to Duff & Phelps by SYNNEX’ management, as the basis for the DCF analysis.

Duff & Phelps utilized the Market Approach (Selected Public Companies / Selected M&A Transactions Analysis) to select valuation multiples for Tech Data. Duff & Phelps reviewed the selected public companies’ financial performance and enterprise value to latest twelve months (which we refer to as “LTM”) and projected revenue and earnings before interest, taxes, depreciation and amortization (which we refer to as “EBITDA”) multiples and the selected M&A transactions’ implied enterprise value to revenue and EBITDA multiples when selecting valuation multiples for Tech Data. In the fairness analysis, all references to EBITDA include stock-based compensation expenses. In making these selections, Duff & Phelps considered Tech Data’s size, growth outlook, capital requirements, profit margins, and other characteristics relative to the selected public companies and the targets in the selected M&A transactions.

Income Approach (Discounted Cash Flow Analysis) Summary

Duff & Phelps performed a DCF analysis of the estimated future unlevered free cash flows attributable to Tech Data for the fiscal years ending January 31, 2022 through January 31, 2024, with unlevered “free cash flow” defined as cash that is available either to reinvest or to distribute to security holders. The DCF analysis was used to determine the net present value of estimated future free cash flows utilizing a weighted average cost of capital as the applicable discount rate. For the purposes of its DCF analysis, Duff & Phelps utilized and relied upon the SYNNEX Financial Projections, which are described in this proxy statement in the section entitled “—Certain SYNNEX Projections.”

Duff & Phelps estimated the net present value of all cash flows attributable to Tech Data after fiscal year 2024 (which we refer to as the “Terminal Value”) using a perpetuity growth formula assuming a 2.5% terminal growth rate, which took into consideration Duff & Phelps’ estimate of the expected long-term growth rate of the economy and Tech Data’s business. Duff & Phelps used discount rates ranging from 10.0% to 11.0%, reflecting Duff & Phelps’ estimate of Tech Data’s weighted average cost of capital, to discount the projected free cash flows and the Terminal Value. Duff & Phelps estimated Tech Data’s weighted average cost of capital by estimating the weighted average of Tech Data’s cost of equity (derived using the capital asset pricing model) and Tech Data’s after-tax cost of debt. Duff & Phelps believes that this range of discount rates is consistent with the rate of return that security holders could expect to realize on alternative investment opportunities with similar risk profiles. On these assumptions, Duff & Phelps estimates the Terminal Value to be in the range of $7.4 billion to $8.4 billion.

Based on these assumptions, Duff & Phelps’ DCF analysis resulted in an estimated enterprise value for Tech Data of $7.320 billion to $8.250 billion. Duff & Phelps further estimated the range of equity value of Tech Data to be $5.482 billion to $6.412 billion by adding pro forma cash of $1.333 billion, adding the proceeds from a sale lease back transaction of $0.067 billion, subtracting pro forma debt of $2.412 billion, subtracting a working capital adjustment of $0.606 billion, and subtracting the present value of certain restructuring and other expenses of $0.220 billion.

Market Approach (Selected Public Companies / Selected M&A Transactions Analyses) Summary

Duff & Phelps analyzed selected public companies and selected M&A transactions for purposes of estimating valuation multiples with which to calculate a range of implied enterprise values of Tech Data. This collective analysis was based on publicly available information and is described in more detail in the sections that follow.

The companies utilized for comparative purposes in the following analysis were not directly comparable to Tech Data, and the transactions utilized for comparative purposes in the following analysis were not directly comparable to the Merger. Duff & Phelps does not have access to non-public information of any of the

 

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companies used for comparative purposes. Accordingly, a complete valuation analysis of Tech Data and the Merger cannot rely solely upon a quantitative review of the selected public companies and selected transactions, but involves complex considerations and judgments concerning differences in financial and operating characteristics of such companies and targets, as well as other factors that could affect their value relative to that of Tech Data. Therefore, the selected public companies and selected mergers and acquisitions transactions analysis is subject to certain limitations.

Selected Public Companies Analysis. Duff & Phelps compared certain financial information of Tech Data to corresponding data and ratios from publicly traded companies that were deemed relevant to its analysis. For purposes of its analysis, Duff & Phelps used certain publicly available historical financial data and consensus equity analyst estimates for the selected publicly traded companies. Duff & Phelps analyzed a number of factors in comparing Tech Data to the selected public companies and the targets in the selected mergers and acquisitions transactions, including historical and forecasted growth in revenue and profits, profit margins and other characteristics that we deemed relevant. The seven companies included in the selected public company analysis were:

 

Selected Companies   

•  Arrow Electronics, Inc.

  

•  Avnet, Inc.

  

•  CDW Corporation

  

•  Insight Enterprises, Inc.

  

•  PC Connection, Inc.

  

•  ScanSource, Inc.

  

•  SYNNEX Corporation

Duff & Phelps selected these companies for its analysis based on their relative similarity, primarily in terms of business model, to that of Tech Data.

The tables below summarize certain observed trading multiples and historical and projected financial performance, on an aggregate basis, of the selected public companies. The estimates for the LTM, next twelve months (which we refer to as “NTM”) and the twelve months after the next twelve months (which we refer to as “NTM+1”) periods shown in the tables below with respect to the selected public companies were derived based on information for the 12-month periods ending closest to Tech Data’s fiscal year ends for which information was available. Data related to Tech Data’s earnings before interest, taxes, depreciation and amortization (which we refer to as “EBITDA”) were adjusted for purposes of this analysis to eliminate non-recurring income (expenses) and include stock-based compensation expense.

 

Company Information

   Revenue Growth     EBITDA Growth  

Company Name

   3-YR
CAGR
    LTM     NTM     NTM+1     2-Yr.
Proj.
CAGR
    3-YR
CAGR
    LTM     NTM     NTM+1     2-Yr.
Proj.
CAGR
 

Arrow Electronics, Inc.

     2.6     -0.8     14.0     3.1     8.4     -3.1     -9.3     21.5     4.5     12.7

Avnet, Inc.

     -0.3     -3.7     5.0     1.1     3.0     -20.3     -44.9     4.8     18.6     11.5

CDW Corporation

     7.6     2.4     5.5     5.0     5.3     12.6     15.7     -3.1     6.1     1.4

Insight Enterprises, Inc.

     -2.1     -9.4     5.1     5.2     5.1     7.5     2.1     9.3     12.0     10.6

PC Connection, Inc.

     -3.8     -8.1     4.9     4.7     4.8     -2.3     -31.2     19.3     11.9     NA  

ScanSource, Inc.

     0.9     NM       4.8     3.1     NA       -7.3     NM       28.4     NA       NA  

SYNNEX (1)

     6.1     4.7     0.9     -3.5     -1.3     NM       1.6     5.7     3.4     4.6

Mean

     1.6     -2.5     5.7     2.7     4.2     -2.2     -11.0     12.3     9.4     8.2

Median

     0.9     -2.3     5.0     3.1     5.0     -2.7     -3.8     9.3     9.0     10.6

Tech Data

     3.4     0.5     4.7     3.1     3.5     12.1     3.5     0.3     12.7     11.3

 

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Company Information

   EBITDA Margin     EBIT Margin  

Company Name

   3-YR
AVG
    LTM     NTM     NTM+1     3-YR
AVG
    LTM     NTM     NTM+1  

Arrow Electronics, Inc.

     4.2     3.8     4.0     4.1     3.6     3.1     3.4     3.5

Avnet, Inc.

     3.5     2.0     2.3     2.7     2.6     1.1     1.4     1.8

CDW Corporation

     8.1     8.8     8.1     8.2     6.3     6.5     6.3     6.5

Insight Enterprises, Inc.

     3.8     4.2     4.4     4.6     3.3     3.4     4.0     4.1

PC Connection, Inc.

     3.8     3.3     3.8     4.1     3.3     2.8     3.3     3.6

ScanSource, Inc.

     4.1     2.7     3.5     NA       3.0     1.5     2.1     NA  

SYNNEX (1)

     3.0     3.0     3.1     3.4     2.7     2.7     2.9     3.1

Mean

     4.4     4.0     4.2     4.5     3.5     3.0     3.4     3.8

Median

     3.8     3.3     3.8     4.1     3.3     2.8     3.3     3.6

Tech Data

     2.1     2.3     2.2     2.4     1.8     2.0     2.0     2.2

 

(1)

Excludes Concentrix

LTM = Latest Twelve Months

NTM = Next Twelve Months

CAGR = Compounded Annual Growth Rate

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

EBIT = Earnings Before Interest and Taxes

Note: EBITDA includes stock based compensation expense

Source: S&P Capital IQ, SEC Filings, Annual and Interim Reports.

 

COMPANY INFORMATION

   ENTERPRISE VALUE AS MULTIPLE OF  

Company Name

   LTM
EBITDA
     NTM
EBITDA
     NTM+1
EBITDA
     LTM
EBIT
     NTM
EBIT
     NTM+1
EBIT
     LTM
Revenue
 

Arrow Electronics, Inc.

     9.0x        7.4x        7.1x        10.9x        8.7x        8.3x        0.34x  

Avnet, Inc.

     13.6x        11.3x        9.5x        24.1x        18.9x        13.9x        0.27x  

CDW Corporation

     15.9x        16.4x        15.5x        21.6x        21.0x        19.6x        1.41x  

Insight Enterprises, Inc.

     11.8x        10.8x        9.7x        14.6x        11.8x        10.9x        0.50x  

PC Connection, Inc.

     13.6x        11.4x        10.2x        16.1x        13.0x        11.5x        0.45x  

ScanSource, Inc.

     11.9x        8.8x        NA        21.8x        14.5x        NA        0.32x  

SYNNEX (1)

     9.4x        8.9x        8.6x        10.5x        9.5x        9.2x        0.28x  

Mean

     12.2x        10.7x        10.1x        17.1x        13.9x        12.2x        0.51x  

Median

     11.9x        10.8x        9.6x        16.1.x        13.0x        11.2x        0.34x  

 

(1)

Excludes Concentrix

LTM = Latest Twelve Months

NTM = Next Twelve Months

Enterprise Value = (Market Capitalization + Management Equity + Debt + Preferred Stock + Non-Controlling Interest) - (Cash & Equivalents + Net Non-Operating Assets)

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

EBIT = Earnings Before Interest and Taxes

 

(1)

Transaction has not closed as of valuation date, seller was in a distressed situation

 

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Note: EBITDA includes stock based compensation expense

 

Announced

  

Target Name

  

Acquirer Name

   Enterprise
Value
     LTM
Revenue
     LTM
EBITDA
     EBITDA
Margin
    EV /
Revenue
     EV /
EBITDA
 

Dec-20

   Ingram Micro Inc. (1)    Platinum Equity, LLC    $ 7,200.0      $ 45,771.1      $ 1,078.2        2.4     0.16x        6.7x  

Dec-19

   Anixter International Inc.    WESCO International, Inc.    $ 5,000.6      $ 8,808.8      $ 535.4        6.1     0.57x        9.3x  

Jun-19

   PCM, Inc.    Insight Enterprises, Inc.    $ 616.9      $ 2,155.1      $ 56.8        2.6     0.29x        10.9x  

Feb-16

   Ingram Micro Inc.    Tianjin Tianhai Investment Co., Ltd.    $ 6,263.4      $ 43,025.9      $ 769.8        1.8     0.15x        8.1x  

Mean

         $ 4,770.2      $ 24,940.2      $ 610.0        3.2     0.29x        8.8x  

Median

         $ 5,632.0      $ 25,917.3      $ 652.6        2.5     0.22x        8.7x  

Nov-19

   Tech Data Corporation    Apollo Global Management, Inc.    $ 5,950.6      $ 37,082.1      $ 818.6        2.2     0.16x        7.3x  

Sep-16

   AVT Technology Solutions LLC and TS DivestCo B.V.    Tech Data Corporation    $ 2,593.1      $ 9,652.5        NA        NA       0.27x        NA  

Source: S&P Capital IQ, SEC Filings, Annual and Interim Reports.

Selected M&A Transactions Analysis. Duff & Phelps compared Tech Data to the target companies involved in the selected merger and acquisition transactions listed in the tables below. The selection of these transactions was based on, among other things, the target company’s industry, the relative size of the transaction compared to the Merger and the availability of public information related to the transaction.

Summary of Selected Public Companies / Selected M&A Transactions Analyses

In order to estimate a range of enterprise values for Tech Data, Duff & Phelps applied valuation multiples to Tech Data’s LTM EBITDA ending January 31, 2021 and projected SYNNEX Adjusted EBITDA for the fiscal years ending January 31, 2022 and January 31, 2023. Duff & Phelps’ selected valuation multiples were as follows: LTM EBITDA multiple ranged from 9.0x to 10.0x, NTM EBITDA multiple ranged from 8.5x to 9.5x, and NTM + 1 EBITDA multiple ranged from 8.0x to 9.0x. Valuation multiples were selected taking into consideration historical and projected financial performance metrics of Tech Data relative to such metrics of the selected public companies and selected M&A transactions. Rather than applying the average or median multiple from the public company set, Duff & Phelps selected multiples that, in its judgment, reflected Tech Data’s size, growth outlook, capital requirements, profit margins, revenue mix, and other characteristics relative to the selected public companies and M&A transactions. Based on these analyses, Duff & Phelps’ selected public companies and M&A transactions analysis resulted in an estimated enterprise value for Tech Data of $7.440 billion to $8.310 billion. Duff & Phelps further estimated the range of equity value of Tech Data to be $5.602 billion to $6.472 billion by adding pro forma cash of $1.333 billion, adding the proceeds from a sale lease back transaction of $0.067 billion, subtracting pro forma debt of $2.412 billion, subtracting a working capital adjustment of $0.606 billion, and subtracting the present value of certain restructuring and other expenses of $0.220 billion.

Summary of Synergies’ Analysis

Duff & Phelps performed a DCF analysis on projected cost synergies net of projected dis-synergies after-tax (which we refer to as “Net Synergies”) expected to be realized in connection with the Merger for the fiscal years ending January 31, 2022 through January 31, 2024 as provided in the SYNNEX Financial Projections. Approximately $50 million of cost synergies and $20 million of dis-synergies are expected to be realized in the first fiscal year after the consummation of the Merger and approximately $100 million of cost synergies and $15 million of dis-synergies are expected to be realized in the second fiscal year after the consummation of the Merger. Duff & Phelps estimated the Terminal Value of all Net Synergies after the fiscal year ending January 31, 2024 using a perpetuity growth formula assuming a 2.5%

 

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terminal growth rate, which took into consideration an estimate of the expected long-term growth rate of the economy and SYNNEX’ and the Tech Data’s combined business. Duff & Phelps used discount rates ranging from 11.75% to 13.75%, reflecting Duff & Phelps’ estimate of Tech Data’s cost of equity, to discount the projected Net Synergies and the Terminal Value of the Net Synergies. Based on these assumptions, Duff & Phelps’ DCF analysis resulted in an estimated present value for the Net Synergies of $610 million to $740 million.

Duff & Phelps added the present value of Net Synergies to its estimate of the range of equity value of Tech Data to estimate the total value to be received by SYNNEX in the Merger.

Summary of Financial Analysis

Based on Duff & Phelps’ analysis, the concluded range of total value to be received by the Company, excluding the Net Synergies, was estimated to be $5.542 billion to $6.442 billion. Based on Duff & Phelps’ analysis, the concluded range of total value to be received by the Company, including the Net Synergies, was estimated to be $6.152 billion to $7.182 billion. The total consideration to be paid by SYNNEX in the Merger was estimated to be $6.127 billion based on the Company’s common share price of $102.67 as of March 12, 2021.

 

 

 

Duff & Phelps noted that the consideration to be paid by SYNNEX in the Merger was below the range of the values indicated by its analyses including Net Synergies.

Duff & Phelps’ Opinion was only one of the many factors considered by the Board in its evaluation of the Merger and should not be viewed as determinative of the views of the Board.

Fees and Expenses

As compensation for Duff & Phelps’ services in connection with the rendering of its Opinion to the Board, SYNNEX agreed to pay Duff & Phelps a fee of $600,000. The fee was payable upon Duff & Phelps informing the Board that it was prepared to deliver its Opinion.

No portion of Duff & Phelps’ fee is refundable or contingent upon the consummation of a transaction or the conclusion reached in the Opinion.

Furthermore, Duff & Phelps is entitled to be paid additional fees at Duff & Phelps’ standard hourly rates for any time incurred should Duff & Phelps be called upon to support its findings subsequent to the delivery of its

 

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Opinion and/or assist in the preparation or review of documents associated with the Merger. SYNNEX has also agreed to reimburse Duff & Phelps for its reasonable and documented out-of-pocket expenses and reasonable fees and expenses of counsel retained by Duff & Phelps in connection with the engagement. SYNNEX has also agreed to indemnify Duff & Phelps for certain liabilities arising out of its engagement.

The terms of the fee arrangements with Duff & Phelps, which SYNNEX believes are customary in transactions of this nature, were negotiated at arm’s length, and the Board is aware of these fee arrangements.

Disclosure of Prior Relationships

During the two years preceding the date of its Opinion, Duff & Phelps provided financial opinions and valuation services to SYNNEX, and provided valuation services to Tech Data’s private equity sponsor, Apollo and its affiliates (which we collectively refer to as “Apollo”). For these prior engagements, Duff & Phelps received customary fees, expense reimbursement, and indemnification. Total fees paid by each of SYNNEX and Apollo were immaterial to Duff & Phelps’ total revenues.

Interests of Directors and Executive Officers in the Merger

Members of our Board and our executive officers have various interests in the Merger described in this section that may be in addition to, or different from, the interests of SYNNEX’ stockholders generally. The members of the Board were aware of these interests and considered them at the time they approved the Merger Agreement. These interests are described below under “Director and Officer Indemnification and Insurance” and are the only additional or varying interests in the Merger held by the directors and executive officers. Other than Mr. Hume, who will be the Chief Executive Officer of the combined companies, and Mr. Polk, who will be the Chairman of the Board of the combined companies (see Section 2.13 of the Agreement and Plan of Merger attached as Annex A), there have been no determinations as to who will serve on the Board or as executive officers following the Merger, nor as to compensation of the Board or the executive officers following the Merger.

Director and Officer Indemnification and Insurance

We have entered into indemnification agreements with each of our current directors and executive officers. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We also intend to enter into indemnification agreements with our future directors and executive officers. See the section titled “The Merger Agreement—Director and Officer Indemnification and Insurance.”

Certain Effects of the Merger

If the conditions to the closing of the Merger are either satisfied or (to the extent permitted by applicable law) waived, Merger Sub I will be merged with and into Tiger Parent, with Tiger Parent surviving the merger and becoming a wholly owned subsidiary of SYNNEX. Immediately following the Corporate Merger, Tiger Parent will merge with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of SYNNEX upon the terms set forth in the Merger Agreement. As the surviving corporation in the Merger, Merger Sub II will continue to exist following the Merger as a wholly owned subsidiary of SYNNEX.

If the Merger is completed, the aggregate consideration for the Merger in exchange for all the issued and outstanding Tiger Parent common shares will consist of (i) $1.61 billion in cash ($1.11 billion in cash after giving effect to the $500 million equity contribution by Tiger Holdings to Tiger Parent prior to the Effective Time) and (ii) 44 million shares of SYNNEX common stock, plus cash in lieu of any fractional shares of SYNNEX common stock, in each case, without interest (which we collectively refer to as the “Merger Consideration”). See the section entitled “The Merger Agreement—Merger Consideration.”

 

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Consequences if the Merger is Not Completed

If the Share Issuance Proposal and the Authorized Share Charter Amendment Proposal are not approved by the holders of shares of SYNNEX common stock or if the Merger is not completed for any other reason, the Merger Agreement will be void and have no effect, and there will not be any liability or obligation on the part of any party, except that:

 

   

no termination will relieve any party from liability for any Willful Breach;

 

   

no termination will affect the obligations of the parties contained in the confidentiality agreement between them; and

 

   

certain other provisions of the Merger Agreement, including provisions with respect to the allocation of fees and expenses, including, if applicable, the termination fees described below, will survive such termination.

For additional information, see the section entitled “The Merger Agreement—Termination of the Merger Agreement; —Effect of Termination.”

In addition, if the Merger Agreement is terminated under specified circumstances, SYNNEX is required to pay Tiger Parent a termination fee of up to $131,683,200. For additional information, see the section entitled “The Merger Agreement—Termination Fees.”

Financing

SYNNEX anticipates that the total amount of funds necessary to directly or indirectly pay, repay, refinance or repurchase, as applicable, certain existing of its and Tech Data’s indebtedness (including indebtedness of their respective subsidiaries) will be approximately $1,185 million. These amounts will be funded through some or all of (i) the term loan portion of the takeout facility, (ii) cash on hand and (iii) the proceeds that SYNNEX intends to obtain from other financings or offerings of debt securities in lieu of borrowing under the Tranche C of the Bridge Facility. Remaining amounts under the takeout facility will be used for general corporate purposes.

Pursuant to the Bridge Commitment Letter for the Bridge Facility, SYNNEX received commitments for an aggregate principal amount of $7.5 billion in financing, consisting of $4.0 billion in aggregate principal amount of senior unsecured term bridge loans and $3.5 billion in aggregate principal amount of senior unsecured revolving credit commitments, the availability of which was and is subject to reduction upon the consummation of the Permanent Financing pursuant to the terms set forth in the Bridge Commitment Letter. The Bridge Facility originally consisted of three different tranches of senior unsecured loans: Tranche A was for a $1.5 billion senior unsecured term loan; Tranche B was for a $3.5 billion senior unsecured revolving loan; and Tranche C is for a $2.5 billion senior unsecured term loan. On April 16, 2021, SYNNEX entered into the takeout facility and pursuant to the terms of the Bridge Commitment Letter, the commitments with respect to Tranche A and Tranche B of the Bridge Facility were reduced to zero. As a result of the termination of both Tranche A and Tranche B of the Bridge Facility, only Tranche C of the Bridge Facility remains outstanding and the debt financing previously committed to under Tranche A and Tranche B of the Bridge Facility are instead committed to be provided under the takeout facility.

Pursuant to the takeout facility, SYNNEX received commitments for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $3.5 billion, which revolving credit facility may, subject to the lenders’ discretion, potentially be increased by up to an aggregate amount of $500 million and for the extension of a senior unsecured term loan in an aggregate principal amount not to exceed $1.5 billion. The commitments under the takeout facility are subject to customary conditions. The borrower under the takeout facility is SYNNEX.

The commitments under the takeout facility terminate upon the earliest to occur of (i) with respect to the revolving commitments, the fifth anniversary of the closing date (subject, to two one-year extensions upon

 

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SYNNEX’ prior notice to the lenders and the agreement of the lenders to extend such maturity date), (ii) in the event SYNNEX voluntarily elects to reduce such commitments to zero, on such date, or subject to certain conditions, following an event of default, (iii) if the closing does not occur prior to such date, five business days after the termination date of the Merger Agreement, and (iv) the date that the Merger Agreement is terminated by SYNNEX in a signed writing in accordance with the terms of the Merger Agreement.

At this time, SYNNEX has not yet determined whether Tranche C of the Bridge Facility will be required to be utilized in conjunction with the takeout facility to provide the debt financing required to refinance certain indebtedness required to consummate the proposed transactions because such determination will be dependent on future market conditions. SYNNEX intends to obtain additional financing or issue debt securities in lieu of utilizing Tranche C of the Bridge Facility, however, there is no assurance that such alternative arrangements will be available on acceptable terms or at all. If Tranche C of the Bridge Facility is utilized there can be no assurance that any replacement or supplemental financing in lieu of or to refinance Tranche C of the Bridge Facility will be available to SYNNEX on acceptable terms or at all. SYNNEX’ ability to obtain additional debt financing, including financing to refinance, replace or supplement Tranche C of the Bridge Facility, will be subject to various factors, including market conditions and operating performance.

The funding under either the Bridge Commitment Letter or the takeout facility, as applicable, is subject to customary closing conditions, including conditions that do not relate directly to the conditions to closing in the Merger Agreement.

Takeout Facility

The proceeds of the loans under the takeout facility will be used to provide a portion of the debt financing required to refinance certain indebtedness of SYNNEX and Tech Data, which is required to consummate the proposed transaction, together with the payment of related fees and expenses. After the closing date, the revolving credit facility will, subject to customary conditions, be available for general corporate purposes or any other purpose not prohibited by the takeout facility.

Interest Rate

The interest rate per annum applicable to the loans under the takeout facility are, at SYNNEX’ option, equal to either a base rate or a LIBOR (or successor) rate plus an applicable margin, which may (in the case of LIBOR loans) range from 1.125% to 1.75%, based on SYNNEX’ public debt rating (as defined in the New Credit Agreement). The applicable margin on base rate loans is 1.00% less than the corresponding margin on LIBOR (or successor rate) based loans.

Amortization and Prepayments

The maturity of the take out facility will be five years after the closing date, subject, in the case of the revolving credit facility, to two one-year extensions upon SYNNEX’ prior notice to the lenders and the agreement of the lenders to extend such maturity date. Once advanced, the outstanding principal amount of the term loan under the takeout facility will be payable in equal quarterly amounts equal to 1.25% of the principal outstanding balance, commencing on the last day of the first full fiscal quarter after the closing date, with the outstanding principal amount of the term loans due in full on the maturity date. The term loan portion of the takeout facility is not subject to mandatory prepayment. SYNNEX may prepay all or any portion of the term loans under the takeout facility prior to maturity without premium or penalty, subject to reimbursement of any LIBOR breakage costs of the lenders.

 

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Conditions to Closing

The obligation of the lenders to fund the loans under the takeout facility on the closing date is subject, among other things, to:

 

   

consummation of the Merger substantially concurrently with the closing and funding of the takeout facility in all material respects in accordance with the Merger Agreement, without any amendment or modification thereto which is materially adverse to the interests of the lenders under the takeout facilities, who are collectively referred to in this proxy statement as the takeout lenders, unless approved by the agent under the takeout facility (such approval not to be unreasonably withheld, delayed or conditioned);

 

   

the accuracy of certain limited representations and warranties;

 

   

delivery of historical consolidated financial statements of SYNNEX and Tech Data;

 

   

delivery of pro forma financial statements of SYNNEX and its subsidiaries, after giving effect to the transactions;

 

   

the repayment of certain indebtedness of SYNNEX, Tech Data and their respective subsidiaries substantially concurrent with the closing of the takeout facility;

 

   

solvency of SYNNEX and its subsidiaries, on a consolidated basis, after giving effect to the consummation of the transactions; and

 

   

since March 22, 2021, no material adverse effect on Tech Data.

For more information, see “The Merger Agreement—Financing.”

Certain Covenants and Events of Default

The takeout facility contains customary affirmative and negative covenants and events of default (including relating to a change of control) that are customary for similar facilities for similarly rated borrowers. Among other things, such negative covenants restrict, subject to certain exceptions, the ability of SYNNEX and its subsidiaries, to create liens, incur indebtedness (solely with respect to any non-guarantor subsidiary of SYNNEX), mergers or consolidations, enter into certain transactions with affiliates, or change the nature of their business. In addition, the takeout facility contains financial covenants which require SYNNEX to maintain at the end of any of its fiscal quarters commencing with the first full fiscal quarter ending after entry into the takeout facility, (i) a consolidated leverage ratio that may not exceed 4.25 to 1.00 for the first four full fiscal quarters following entry into the takeout facility and 4.00 to 1.00 thereafter, and (ii) an interest coverage ratio of not less than 3.50 to 1.00.

Regulatory Approvals

Department of Justice, Federal Trade Commission and Other U.S. Antitrust Authorities

Under the HSR Act, certain transactions, including the Merger, may not be completed unless certain waiting period requirements have expired or been terminated. The HSR Act provides that each party must file a pre-merger notification with the FTC and the DOJ. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties’ filings of their respective HSR Act notification forms or the early termination of that waiting period. This initial waiting period may be extended for an additional 30 days should the acquiring person withdraw its filing before expiration of the initial 30 days and promptly refile it. If the FTC or DOJ issues a Request for Additional Information and Documentary Material prior to the expiration of the initial waiting period (including a re-filing period after withdrawing the initial HSR filings), the parties must observe a second 30-calendar-day waiting period, which would begin to run only after both parties have substantially complied with the request for additional information, unless the waiting period is terminated earlier. Under the Merger Agreement, completion of the Merger is conditioned on the HSR Act Clearance.

Neither SYNNEX nor Tiger Parent will agree, directly or indirectly, to extend any waiting period under the HSR Act or other applicable law or to any timing agreement with the FTC, the Antitrust Division or any other

 

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governmental entity, without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed.

On April 2, 2021, SYNNEX and Tiger Parent filed their respective notification and report forms under the HSR Act with respect to the Merger with the FTC and DOJ, which triggered the start of the HSR Act waiting period. At the end of the initial 30-day waiting period, SYNNEX pulled and re-filed its notification and report form under the HSR Act, with the consent of Tiger Parent, to allow the FTC and DOJ an additional 30 days to review the Merger. This additional 30-day period expired on June 4, 2021. Additionally, the Merger has received clearance for some of the non-U.S. regulatory filings, while other non-U.S. regulatory clearances remain outstanding.

At any time before or after the Merger is completed, the FTC or DOJ could take action under U.S. federal antitrust laws in opposition to the Merger, including seeking to enjoin completion of the Merger, condition adoption of the Merger Agreement upon the divestiture of assets of Tiger Parent, SYNNEX or their respective subsidiaries or impose restrictions on SYNNEX’ post-Merger operations or other conditions. In addition, U.S. state attorneys general could take such action under state antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin completion of the Merger or permitting completion subject to regulatory concessions or conditions. Private parties also may seek to take legal action under the U.S. federal or state antitrust laws under some circumstances.

For a description of SYNNEX’ and Tiger Parent’s respective obligations under the Merger Agreement with respect to regulatory approvals, see the section entitled “The Merger Agreement—Covenant and Agreements—Efforts to Complete the Merger.”

Litigation Related to the Merger

Between May 26, 2021and June 4, 2021, three complaints challenging the Merger were filed.

Joel Zalvin v. Kevin Murai, et al., No. 21CV-0303, was filed on May 26, 2021 in the Superior Court of California, County of San Luis Obispo. The action names as defendants SYNNEX, Tech Data, and all the members of SYNNEX’ Board. It purports to assert claims for intentional misrepresentation, fraud and concealment, negligent misrepresentation and concealment, and violation of California Corporations Code Section 25401. It alleges that the preliminary proxy statement contains material misstatements and omissions regarding the Merger. It seeks declaratory and injunctive relief, including enjoining or rescinding the stockholder vote. It also seeks compensatory and punitive damages, attorneys’ fees and costs.

Patrick Akowuah v. SYNNEX Corp., et al., No. 1:21-cv-04751, was filed on May 27, 2021 in the United States District Court for the Southern District of New York. The action names as defendants SYNNEX and members of SYNNEX’ Board. It purports to assert claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 14a-9 thereunder. It alleges that the preliminary proxy statement contains material misstatements and omissions regarding the Merger. It seeks to enjoin the defendants from proceeding with the Merger. It seeks declaratory and injunctive relief, including enjoining or rescinding the stockholder vote. It also seeks rescissory damages, attorneys’ fees and costs.

Walter Voegtlin v. SYNNEX Corp., et al., No. 1:21-cv-03159, was filed on June 4, 2021 in the United States District Court for the Eastern District of New York. The action names as defendants SYNNEX and members of SYNNEX’ Board. It purports to assert claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 14a-9 thereunder. It alleges that the preliminary proxy statement contains material misstatements and omissions regarding the Merger. It seeks to enjoin the defendants from proceeding with the Merger. It seeks declaratory and injunctive relief, including enjoining or rescinding the stockholder vote. It also seeks rescissory damages, attorneys’ fees and costs.

This summary is qualified in its entirety by reference to the full text of the complaints, attached hereto as Annex G, Annex H and Annex I.

 

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THE MERGER AGREEMENT

The following summary describes certain material provisions of the Merger Agreement. This summary is not complete and is qualified in its entirety by the Merger Agreement, which is attached to this proxy statement as Annex A and which constitutes part of this proxy statement. We encourage you to read carefully the Merger Agreement in its entirety because this summary may not contain all of the information about the Merger Agreement that is important to you. The rights and obligations of the parties to the Merger Agreement are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

The representations, warranties, covenants and agreements described below and included in the Merger Agreement were made only for purposes of the Merger Agreement as of specific dates, were solely for the benefit of the parties to the Merger Agreement (except as otherwise specified therein) and may be subject to important qualifications, limitations and supplemental information agreed to by SYNNEX, Tiger Parent, Merger Sub I, and Merger Sub II in connection with negotiating the terms of the Merger Agreement. In addition, the representations and warranties may have been included in the Merger Agreement for the purpose of allocating contractual risk between SYNNEX, Tiger Parent, Merger Sub I, and Merger Sub II rather than to establish matters as facts and may be subject to standards of materiality applicable to such parties that differ from those applicable to investors. Except for the right of Tiger Holdings to receive the Merger Consideration after the closing of the Merger, investors and security holders are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of SYNNEX, Tiger Parent, Merger Sub I, and Merger Sub II, or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement. In addition, you should not rely on the covenants and agreements in the Merger Agreement as actual limitations on the respective businesses of SYNNEX, Tiger Parent, Merger Sub I, and Merger Sub II because the parties to the Merger Agreement may take certain actions that are either expressly permitted in the confidential disclosure schedule to the Merger Agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. The Merger Agreement is described below, and included as Annex A hereto, only to provide you with information regarding its terms and conditions and not to provide any other factual information regarding SYNNEX, Tiger Parent, Merger Sub I, and Merger Sub II, or their respective businesses. Accordingly, the representations, warranties, covenants and other agreements in the Merger Agreement should not be read alone, and you should read the information provided elsewhere in this document and in the filings that SYNNEX has made or will make with the SEC. See the section entitled “Where You Can Find More Information.”

Structure of the Merger

The Merger Agreement provides for a two-step merger. Subject to the terms and conditions of the Merger Agreement, Merger Sub I will merge with and into Tiger Parent, with Tiger Parent surviving the merger and becoming a wholly owned subsidiary of SYNNEX. Immediately following such merger, Tiger Parent, as the surviving corporation will merge with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of SYNNEX (as mentioned above, the Corporate Merger and the LLC Merger, are collectively referred to herein as the “Merger”). The Merger is intended to be considered together as a single integrated transaction for U.S. federal income tax purposes and to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

We collectively refer to SYNNEX and the surviving entity, after giving effect to the Merger, together with their subsidiaries, as the “combined company.”

 

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Merger Consideration

If the Merger is completed, the aggregate consideration for the Merger in exchange for all the issued and outstanding Tiger Parent common shares will consist of (i) $1.61 billion in cash ($1.11 billion in cash after giving effect to the $500 million equity contribution by Tiger Holdings to Tiger Parent prior to the Effective Time) and (ii) 44 million shares of SYNNEX common stock, plus cash in lieu of any fractional shares of SYNNEX common stock, in each case, without interest.

Closing

Unless another date, time or place is agreed to in writing by SYNNEX and Tiger Parent, the closing of the Merger will occur electronically (including by email) by the exchange of required closing deliverables no later than the fifth business day after satisfaction (or waiver to the extent legally permissible) of the closing conditions described below under “—Conditions to the Merger” (except for any conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions). However, in the event the closing would otherwise be required to occur during the last seven days of any fiscal quarter of SYNNEX, then, SYNNEX may elect to have the closing occur instead on the earlier of (i) the first business day of the following SYNNEX’ fiscal quarter, or (ii) the termination date of the Merger Agreement which is described below under “—Termination of the Merger Agreement” (unless the parties mutually agree to another date).

Effective Time

The Corporate Merger will become effective at the time the certificate of merger relating to the Corporate Merger has been duly filed with the Secretary of State of the State of Delaware or at such other time agreed upon by SYNNEX and Tiger Parent and specified in such certificate of merger. Similarly, the LLC Merger will become effective at the time the certificate of merger relating to the LLC Merger has been duly filed with the Secretary of State of the State of Delaware or at such other time agreed upon by SYNNEX and Tiger Parent and specified in such certificate of merger.

Conversion of Shares; Exchange of Certificates

The conversion of the Tiger Parent common shares into the right to receive the Merger Consideration will occur automatically in connection with the Merger. Effective upon the Merger, the Tiger Parent common shares will no longer be outstanding and will cease to exist, and each certificate that previously represented the Tiger Parent common shares will represent only the right to receive the Merger Consideration, including (a) shares of SYNNEX, (b) cash in lieu of fractional shares, (c) any dividends or distributions which the holder thereof has the right to receive, and (d) amount of cash which such shares have been converted into the right to receive, as described above and subject to the terms and conditions set forth in the Merger Agreement. No interest will be paid or accrue on any cash payable upon conversion of the shares of Tiger Parent’s common stock.

SYNNEX, Tiger Parent, the Merger Sub I, Merger Sub II and any other person that has a withholding obligation will be entitled to deduct and withhold from the consideration otherwise payable to any person under the Merger Agreement any amounts required to be deducted and withheld from such payment under applicable tax laws.

Conditions to the Merger

Conditions to the Obligations of the Parties to Complete the Merger

The obligations of each of SYNNEX, Merger Sub I, Merger Sub II and Tiger Parent to complete the Merger are subject to satisfaction of various conditions, including the following:

 

   

SYNNEX’ stockholder approval shall have been obtained;

 

   

the SYNNEX common stock issuable as Merger Consideration will have been authorized for listing on the NYSE;

 

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the HSR Act Clearance and other required regulatory approvals will have been obtained; and

 

   

no law, order, injunction or decree will be in effect that prevents, makes illegal or prohibits the Merger.

Conditions to the Obligations of SYNNEX, Merger Sub I, and Merger Sub II to Complete the Merger

In addition, the obligations of SYNNEX, Merger Sub I and Merger Sub II to complete the Merger are subject to the satisfaction (or waiver to the extent legally permissible) at or prior to the closing of the following conditions:

 

   

the representations and warranties of Tiger Parent set forth in the Merger Agreement with respect to (i) certain corporate organization matters, (ii) certain capitalization matters, (iii) certain authority matters, (iv) that Tiger Parent entering into the Merger Agreement will not violate its organizational documents, (v) brokers matters, and (vi) the absence of a Tiger Parent material adverse effect or any event, change, effect, development or occurrence that would be reasonably expected to result in, individually or in the aggregate, a Tiger Parent material adverse effect since January 31, 2021 and through the date of the Merger Agreement being accurate in all respects as of the date of the Merger Agreement and as of the closing as if made as of the closing (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), provided that certain representation and warranties referred to in clauses (ii) and (iii) above, shall be accurate other than de minimis failures;

 

   

the representations and warranties of Tiger Parent set forth in the Merger Agreement with respect to Tiger Parent having any knowledge or written notice of any significant deficiencies and material weaknesses in the design or operation of Tiger Parent’s internal accounting controls which are reasonably likely to adversely affect Tiger Parent’s ability to record and report financial information being accurate in all respects as of the date of the Merger Agreement and as of the closing as if made as of the closing;

 

   

the representations and warranties of Tiger Parent set forth in the Merger Agreement with respect to Tiger Parent having any knowledge or written notice of any fraud, whether or not material, that involves management or other employees who have a significant role in Tiger Parent’s internal accounting controls being accurate in all respects as of the date of the Merger Agreement and in all material respects as of the closing as if made as of the closing;

 

   

the representations and warranties of Tiger Parent set forth in the Merger Agreement with respect to (i) certain financial statement matters, (ii) absences of certain changes matters, (iii) tax matters, (iv) related party transaction matters, and (v) Tiger Parent’s board recommendation being accurate in all material respects, without giving effect to any qualification as to materiality set forth in such representations or warranties, being accurate as of the date of the Merger Agreement and as of the closing as if made as of the closing (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date);

 

   

all other representations and warranties of Tiger Parent set forth in the Merger Agreement (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties) being accurate as of the date of the Merger Agreement and as of the closing as if made as of the closing (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), provided that such representations and warranties shall be deemed to be accurate unless any failure to be accurate, either individually or in the aggregate (without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties) has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tiger Parent;

 

   

Tiger Parent having performed in all material respects the obligations and agreements required to be performed by it under the Merger Agreement at or prior to the closing

 

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SYNNEX having received a certificate dated as of the closing date and signed on behalf of Tiger Parent by the Chief Executive Officer or the Chief Financial Officer of Tiger Parent, certifying the satisfaction of the above conditions;

 

   

since the date of the Merger Agreement, no Tiger Parent material adverse effect nor any event, change, effect, development or occurrence that would or would reasonably be expected to result in, individually or in the aggregate, a Tiger Parent material adverse effect having occurred;

 

   

the written consent of the sole stockholder of Tiger Parent, approving the Merger Agreement and the Merger, remaining in effect and full force;

 

   

SYNNEX having received a duly executed counterpart of the Investor Rights Agreement from Tiger Holdings; and

 

   

SYNNEX having received reasonably acceptable evidence that Tiger Parent had caused one or more of its affiliates to make an equity contribution to Tiger Parent of at least $500,000,000 in cash, in exchange for shares of Tiger Parent’s common stock.

Conditions to the Obligations of Tiger Parent to Complete the Merger

In addition, the obligations of Tiger Parent to complete the Merger are subject to the satisfaction (or waiver to the extent legally permissible) at or prior to the closing of the following conditions:

 

   

the representations and warranties of SYNNEX, Merger Sub I and Merger Sub II set forth in the Merger Agreement with respect to (i) certain corporate organization matters, (ii) certain capitalization matters, (iii) certain authority matters, (iv) that SYNNEX, Merger Sub I and Merger Sub II entering into the Merger Agreement will not violate their organizational documents, (v) brokers matters, and (vi) the absence of a SYNNEX material adverse effect or any event, change, effect, development or occurrence that would be reasonably expected to result in, individually or in the aggregate, a SYNNEX material adverse effect since November 30, 2020 and through the date of the Merger Agreement being accurate in all respects as of the date of the Merger Agreement and as of the closing as if made as of the closing (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), provided that certain representation and warranties referred to in clause (ii) above shall be accurate other than de minimis failures;

 

   

the representations and warranties of SYNNEX, Merger Sub I and Merger Sub II set forth in the Merger Agreement with respect to SYNNEX having any knowledge or written notice of any significant deficiencies and material weaknesses in the design or operation of SYNNEX internal accounting controls which are reasonably likely to adversely affect SYNNEX’ ability to record and report financial information being accurate in all respects as of the date of the Merger Agreement and as of the closing as if made as of the closing;

 

   

the representations and warranties of SYNNEX, Merger Sub I and Merger Sub II set forth in the Merger Agreement with respect to SYNNEX having any knowledge or written notice of any fraud, whether or not material, that involves management or other employees who have a significant role in SYNNEX’ internal accounting controls being accurate in all respects as of the date of the Merger Agreement and in all material respects as of the closing as if made as of the closing;

 

   

the representations and warranties of SYNNEX, Merger Sub I and Merger Sub II set forth in the Merger Agreement with respect to (i) certain financial statement matters, (ii) absences of certain changes matters, (iii) tax matters, (iv) related party transaction matters, (v) SYNNEX, Merger Sub I and Merger Sub II board recommendation matters, and (vi) fairness opinion matters being accurate in all material respects, without giving effect to any qualification as to materiality set forth in such representations or warranties, being accurate as of the date of the Merger Agreement and as of the closing as if made as of the closing (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date);

 

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all other representations and warranties of SYNNEX, Merger Sub I and Merger Sub II set forth in the Merger Agreement (read without giving effect to any qualification as to materiality or material adverse effect set forth in such representations or warranties) being accurate as of the date of the Merger Agreement and as of the closing as if made as of the closing (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), provided that such representations and warranties shall be deemed to be accurate unless any failure to be accurate, either individually or in the aggregate (without giving effect to any qualification as to materiality or material adverse effect set forth in such representations or warranties) has had or would reasonably be expected to have, either individually or in the aggregate, a material adverse effect on SYNNEX;

 

   

SYNNEX having performed in all material respects the obligations and agreements required to be performed by it under the Merger Agreement at or prior to the closing;

 

   

Tiger Parent having received a certificate dated as of the closing date and signed on behalf of SYNNEX by the Chief Executive Officer or the Chief Financial Officer of SYNNEX, certifying the satisfaction of the above conditions;

 

   

since the date of the Merger Agreement, no SYNNEX material adverse effect nor any event, change, effect, development or occurrence that would or would reasonably be expected to result in, individually or in the aggregate, a SYNNEX material adverse effect having occurred; and

 

   

Tiger Holdings having received a duly executed counterpart of the Investor Rights Agreement from SYNNEX.

Termination of the Merger Agreement

The Merger Agreement may be terminated at any time prior to the effective time of the Merger by mutual written agreement of SYNNEX and Tiger Parent. The Merger Agreement may also be terminated by either SYNNEX or Tiger Parent if:

 

   

any legal restraint, including the denial of any required regulatory approval, is in effect that has become final and nonappealable, except that no party may terminate the Merger Agreement as described in this bullet point if the existence of such legal restraint was principally caused by such party’s failure to perform or observe any of its obligations, covenants or agreements under the Merger Agreement;

 

   

the Merger has not occurred on or before 11:59 p.m. on the outside date of December 22, 2021, except that, if on the outside date, all of the closing conditions described under “—Conditions to the Merger” have been satisfied or duly waived by all parties entitled to the benefit thereof except for closing conditions regarding the existence of a legal restraint or HSR Act Clearance or a required regulatory approval, a party may extend the outside date to March 22, 2022, and if such circumstances continue to exist on such extended outside date, a party may then further extend the outside date to June 22, 2022, except that no party may extend the outside date as described in this bullet point if the failure of the Merger to occur on or by the outside date was principally caused by such party’s failure to perform or observe any of its obligations, covenants or agreements under the Merger Agreement;

 

   

if the other party has breached any of the obligations, covenants or agreements, or representations or warranties of the other party, such that if that breach was in effect as of the closing, the other party would not be able to satisfy it closing conditions described under “—Conditions to the Merger”, and the other party did not cure such breach within 30 days after receiving written notice of the breach from the terminating party, except that no party may terminate the Merger Agreement as described in this bullet point if it is then in material breach of any of its obligations, covenants or other agreements under the Merger Agreement; or

 

   

SYNNEX’ stockholders fail to approve the Share Issuance Proposal and the Authorized Share Charter Amendment at the special meeting or at any adjournment or postponement thereof at which a vote on such proposals and matters is taken.

 

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The Merger Agreement may be terminated by Tiger Parent at any time prior to receipt of SYNNEX’ stockholder approval, if SYNNEX has made a change of recommendation as described under the section entitled “—Change of Recommendation”; or SYNNEX has committed a Willful Breach of certain of its non-solicitation obligations.

The Merger Agreement may be terminated by SYNNEX, at any time prior to obtaining SYNNEX’ stockholder approval, in order to accept a superior acquisition proposal in accordance with, and subject to the terms and conditions of, the provisions described under “—Covenants and Agreements—No Solicitation; —Change of Recommendation”.

Effect of Termination

If the Merger Agreement is terminated as described in “—Termination of the Merger Agreement” above, the Merger Agreement will be void and have no effect, and there will not be any liability or obligation on the part of any party, except that:

 

   

no termination will relieve any party from liability for any Willful Breach;

 

   

no termination will affect the obligations of the parties contained in the confidentiality agreement between them; and

 

   

certain other provisions of the Merger Agreement, including provisions with respect to the allocation of fees and expenses, including, if applicable, the termination fees described below, will survive such termination.

Termination Fees

We refer to the fees described below as the termination fees.

If the Merger Agreement is terminated under certain circumstances, SYNNEX must pay Tiger Parent a termination fee or reimburse Tiger Parent for its reasonable fees, costs and other expenses directly related to the Merger. These payments are Tiger Parent’s sole and exclusive remedy, except in the case of a Willful Breach, for any claims arising out of the Merger Agreement, together with any costs and expenses incurred by Tiger Parent in enforcing payment of such termination fee. In no event will SYNNEX be required to pay to Tiger Parent more than one termination fee. The Merger Agreement provides that SYNNEX will pay Tiger Parent a termination fee of $131,683,200 in cash in connection with a termination of the Merger Agreement under the following circumstances:

 

   

prior to obtaining SYNNEX’ stockholder approval, SYNNEX terminates the Merger Agreement in order to accept a superior acquisition proposal in accordance with, and subject to the terms and conditions of, the provisions described under “—Covenants and Agreements—No Solicitation; —Change of Recommendation”;

 

   

prior to obtaining SYNNEX’ stockholder approval, Tiger Parent terminates the Merger Agreement in connection with the Board having made a change of recommendation as described under the section entitled “—Change of Recommendation” or following a Willful Breach by SYNNEX of its non-solicitation obligations;

The Merger Agreement provides that SYNNEX will pay Tiger Parent any reasonable costs and expenses incurred by Tiger Parent directly related to the Merger (which we refer to as the “Company Costs”), if either SYNNEX or Tiger Parent terminate the Merger Agreement because SYNNEX’ stockholders fail to approve the Share Issuance Proposal and the Authorized Share Charter Amendment at the special meeting or at any adjournment or postponement thereof at which a vote on such proposals and matters is taken. The Merger Agreement further provides that in the event that (i) an acquisition proposal of SYNNEX is proposed to the Board or publicly by a third party and not withdrawn at least two business days prior to SYNNEX’ stockholder meeting, and (ii) the Merger Agreement

 

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is terminated because SYNNEX’ stockholders fail to approve the Share Issuance Proposal and the Authorized Share Charter Amendment at the special meeting or at any adjournment or postponement thereof at which a vote on such proposals and matters is taken, and (iii) within the following 12 months after such termination, SYNNEX enters into an agreement regarding an alternative acquisition proposal, and actually consummates such transaction, that SYNNEX will pay Tiger Parent a tail termination fee (without duplication of the amount of the Company Costs actually paid by SYNNEX) in an amount equal to:

 

   

$131,683,200 if SYNNEX consummates or enters into a definitive agreement with respect to such alternative acquisition transaction within six months after the date of termination of the Merger Agreement;

 

   

$86,275,200 if SYNNEX consummates or enters into a definitive agreement with respect to such alternative acquisition transaction between six and nine months after the date of termination of the Merger Agreement; or

 

   

$40,867,200 if SYNNEX consummates or enters into a definitive agreement with respect to such alternative acquisition transaction between nine and 12 months after the date of termination of the Merger Agreement.

Covenants and Agreements

Conduct of the Business of Tiger Parent

Tiger Parent has agreed to certain covenants in the Merger Agreement restricting the conduct of its business between the date of the Merger Agreement and the completion of the Merger.

Tiger Parent has agreed that, except (i) as required by the Merger Agreement, (ii) to the extent action is reasonably taken in response to the COVID-19 pandemic and consistent with its prior actions in response to the COVID-19 pandemic and discussed in advance with SYNNEX, or (iii) as consented to in writing by SYNNEX, it will and will cause its subsidiaries to:

 

   

conduct its business in the ordinary course in all material respects; and

 

   

use commercially reasonable efforts to maintain and preserve intact its business organization, employees and advantageous business relationships.

In addition, Tiger Parent has agreed that, except as required or contemplated by the Merger Agreement or as consented to in writing by SYNNEX (such consent not to be unreasonably withheld, delayed or conditioned), Tiger Parent will not and will cause its subsidiaries not to:

 

   

incur, assume, guarantee or become liable for any indebtedness for borrowed money, other than (A) intercompany indebtedness and guarantees thereof, (B) borrowings in the ordinary course under any existing revolving credit facility, settlement facility, commercial paper program, corporate credit facility or other line of credit up to the existing amount committed thereunder, or (C) indebtedness incurred in the ordinary course of business for borrowed money not in excess of $250,000,000 in the aggregate;

 

   

adjust, split, combine or reclassify any of its capital stock;

 

   

make, declare, pay or set a record date for any dividend, withdrawal, redemption or any other distribution on or payment with respect to, any shares of its capital stock (whether directly or indirectly to affiliates of stockholders) or any payments to any of its stockholders or their affiliates, other than dividends paid by any of Tiger Parent’s subsidiaries to Tiger Parent or its wholly-owned subsidiaries;

 

   

issue, sell, transfer, encumber or otherwise permit to become outstanding any shares of capital stock or voting securities or equity interests or securities convertible or exchangeable into, or exercisable for (including any options, warrants, or other rights of any kind to acquire), any shares of its capital stock or other equity or voting securities, except pursuant to the exercise of stock options or the settlement of equity compensation awards in accordance with their terms;

 

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sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets to any individual, corporation or other entity, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case other than (i) to any wholly-owned subsidiary of Tiger Parent, (iii) in the ordinary course of business consistent with past practice or (iii) pursuant to certain existing, specified contracts;

 

   

except with respect to certain agreed upon specified exceptions or as required under applicable law or the terms of any existing employee benefit plan, (i) establish, adopt, amend or terminate any employee benefit or compensation plan, program, policy or arrangement for the benefit or welfare of any current or former employees, officers, directors or consultants, other than amendments in the ordinary course of business consistent with past practice that do not increase severance obligations, (ii) increase the compensation or benefits payable to any current or former employee, officer, director or consultant, (iii) pay or award, or commit to pay or award, any bonuses or incentive compensation other than in the ordinary course of business consistent with past practice, (iv) grant or accelerate the vesting of any equity-based awards or other compensation, (v) enter into any new, or amend any existing, employment, severance, change in control, retention, bonus guarantee, collective bargaining agreement or similar agreement or arrangement, (vi) fund any rabbi trust or similar arrangement, (vii) terminate any officer or any employee whose target annual compensation is greater than $400,000, other than for cause, or (viii) hire or promote any officer, employee or individual consultant who has or will have target annual compensation greater than $400,000;

 

   

settle any claim, suit, action or proceeding, except involving monetary remedies in an amount not in excess of $2,500,000 individually or $10,000,000 in the aggregate and that would not impose any material restriction on, or create any adverse precedent that would be material to, the business of Tiger Parent or its subsidiaries, or the combined company, taken as a whole, following the Merger;

 

   

take any action or fail to take any action that could be reasonably expected to impede or prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;

 

   

amend the organizational documents of Tiger Parent or its material subsidiaries;

 

   

merge or consolidate Tiger Parent or any of its significant subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve itself or any of its significant subsidiaries;

 

   

make, change or revoke any material tax election, change a material annual tax accounting period, adopt or change any material tax accounting method, enter into any closing agreement with respect to a material amount of taxes, or settle any material tax claim, audit, assessment or dispute for an amount materially in excess of the amount reserved therefor, in each case, other than in the ordinary course of business; or

 

   

agree to take or make any commitment to take any of the actions prohibited by bullets set forth above.

Conduct of the Business of SYNNEX

SYNNEX has agreed to certain covenants in the Merger Agreement restricting the conduct of its business between the date of the Merger Agreement and the completion of the Merger.

SYNNEX has agreed that, except (i) as required by the Merger Agreement or the financing described under “—Financing”, (ii) to the extent action is reasonably taken in response to the COVID-19 pandemic and consistent with its prior actions in response to the COVID-19 pandemic, or (iii) as consented to in writing by Tiger Parent, it will and will cause its subsidiaries to:

 

   

conduct its business in the ordinary course in all material respects; and

 

   

use commercially reasonable efforts to maintain and preserve intact its business organization, employees and advantageous business relationships.

 

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In addition, SYNNEX has agreed that, except as required or contemplated by the Merger Agreement or as consented to in writing by Tiger Parent (such consent not to be unreasonably withheld, delayed or conditioned), SYNNEX will not and will cause its subsidiaries not to:

 

   

incur, assume, guarantee or become liable for any indebtedness for borrowed money, other than (i) intercompany indebtedness and guarantees thereof, (ii) borrowings in the ordinary course under any existing revolving credit facility, settlement facility, commercial paper program, corporate credit facility or other line of credit up to the existing amount committed thereunder, (iii) indebtedness incurred in the ordinary course of business for borrowed money not in excess of $250,000,000 in the aggregate, or (iv) in connection with the financing described under “—Financing.”

 

   

adjust, split, combine or reclassify any capital stock;

 

   

make, declare, pay or set a record date for any dividend, or any other distribution on, any shares of its capital stock other than (i) certain specified regular quarterly cash dividends by SYNNEX, or (B) dividends paid by any of SYNNEX’ subsidiaries to SYNNEX or any of its wholly-owned subsidiaries;

 

   

issue, sell, transfer, encumber or otherwise permit to become outstanding any shares of capital stock or voting securities or equity interests or securities convertible or exchangeable into, or exercisable for, any shares of its capital stock or other equity or voting securities, except (i) pursuant to the exercise of stock options or the settlement of equity compensation awards in accordance with their terms, or (ii) the grant of equity compensation awards, in the ordinary course of business consistent with past practice;

 

   

sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets to any individual, corporation or other entity, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case other than (i) to any wholly-owned subsidiary of SYNNEX, (ii) in the ordinary course of business consistent with past practice or (iii) pursuant to certain specified contracts;

 

   

except with respect to certain agreed upon specified exceptions or as required under applicable law or the terms of any existing employee benefit plan, (i) establish, adopt, amend or terminate any employee benefit or compensation plan, program, policy or arrangement for the benefit or welfare of any current or former employees, officers, directors or consultants, other than amendments in the ordinary course of business consistent with past practice that do not increase severance obligations, (ii) increase the compensation or benefits payable to any current or former employee, officer, director or consultant, (iii) pay or award, or commit to pay or award, any bonuses or incentive compensation other than in the ordinary course of business consistent with past practice, (iv) grant or accelerate the vesting of any equity-based awards or other compensation, (v) enter into any new, or amend any existing, employment, severance, change in control, retention, bonus guarantee, collective bargaining agreement or similar agreement or arrangement, (vi) fund any rabbi trust or similar arrangement, (vii) terminate any officer or any employee whose target annual compensation is greater than $400,000, other than for cause, or (viii) hire or promote any officer, employee or individual consultant who has or will have target annual compensation greater than $400,000;

 

   

settle any claim, suit, action or proceeding, except involving monetary remedies in an amount not in excess of $2,500,000 individually or $10,000,000 in the aggregate and that would not impose any material restriction on, or create any adverse precedent that would be material to, the business of SYNNEX or its subsidiaries, or the combined company, taken as a whole, following the Merger;

 

   

take any action or fail to take any action that could reasonably be expected to impede or prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;

 

   

amend the organizational documents of SYNNEX or any of its material subsidiaries;

 

   

merge or consolidate SYNNEX with any other person, or restructure, reorganize or completely or partially liquidate or dissolve itself;

 

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make, change or revoke any material tax election, change a material annual tax accounting period, adopt or change any material tax accounting method, enter into any closing agreement with respect to a material amount of taxes, or settle any material tax claim, audit, assessment or dispute for an amount materially in excess of the amount reserved therefor, in each case, other than in the ordinary course of business; or

 

   

agree to take or make any commitment to take any of the actions prohibited by bullets set forth above.

SYNNEX’ Stockholders Meeting

As soon as reasonably practicable, but no later than 45 days, after the date of the Merger Agreement, SYNNEX agreed to prepare, in consultation with Tiger Parent, and file with the SEC the preliminary proxy statement. Furthermore, as soon as reasonably practicable, but no later than 45 days, after the expiration of the 10-day waiting period promulgated under the Exchange Act or the date on which SYNNEX learns the SEC has no further comments on the proxy statement, SYNNEX agreed to duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of seeking the adoption of the Merger Agreement Proposal, the Share Issuance Proposal, the Authorized Share Charter Amendment Proposal and the Corporate Opportunity Charter Amendment Proposal. Unless the Board has made a change of recommendation as described under the section entitled “—Change of Recommendation,” SYNNEX will recommend that its stockholders adopt the Merger Agreement Proposal, the Share Issuance Proposal, the Authorized Share Charter Amendment Proposal and the Corporate Opportunity Charter Amendment Proposal, and use its reasonable best efforts to solicit from its stockholders proxies in favor of such proposals and take all other action necessary or advisable to obtain such stockholder approval.

Stock Exchange Listing

SYNNEX has agreed to use its reasonable best efforts to cause the shares of SYNNEX common stock to be issued in connection with the Merger to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Merger.

No Solicitation

Each of SYNNEX and Tiger Parent mutually agreed to immediately cease discussions or negotiations with any other person that may have been ongoing prior to the date of the Merger Agreement, with respect to any alternative acquisition proposal of SYNNEX or Tiger Parent, as applicable, and to request the return or destruction of any confidential information previously delivered to any such person.

Each of SYNNEX and Tiger Parent has agreed that it will not, and will cause each of its subsidiaries and other respective representatives not to, directly or indirectly:

 

   

initiate, solicit, knowingly encourage or knowingly facilitate any inquiries or proposals with respect to any alternative acquisition proposal;

 

   

engage or participate in any negotiations with any person concerning any alternative acquisition proposal;

 

   

provide any confidential or nonpublic information or data to, or have or participate in any discussions with any person relating to any alternative acquisition proposal; or

 

   

approve or enter into any acquisition agreement, term sheet, letter of intent, memorandum of understanding or other similar agreement in connection with or relating to any alternative acquisition proposal (unless the Merger Agreement has been terminated).

If, prior to the receipt of SYNNEX’ stockholder approval, SYNNEX receives a bona fide written alternative acquisition proposal not solicited in violation its non-solicitation obligations under the Merger Agreement,

 

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SYNNEX may furnish confidential or nonpublic information to, and participate in such negotiations or discussions with, the person making the alternative acquisition proposal, if the Board concludes in good faith, after consulting with such outside advisors as it determines in good faith to be reasonably necessary, that taking such actions would be required to comply with its fiduciary duties. Before furnishing any confidential or nonpublic information, SYNNEX may and shall enter into a confidentiality agreement with the person making such alternative acquisition proposal that contains terms no less favorable than the confidentiality agreement between SYNNEX and Tiger Parent (provides that such confidentiality agreement shall not give such person with any exclusive right to negotiate with SYNNEX, and shall otherwise permit SYNNEX to comply with its obligations under the Merger Agreement).

SYNNEX must promptly (within 24 hours) advise Tiger Parent if it has received any alternative acquisition proposal or any inquiry which could reasonably be expected to lead to an alternative acquisition proposal, and the substance thereof (including the terms and conditions of and the identity of the person making such inquiry or alternative acquisition proposal). SYNNEX must further provide Tiger Parent with an unredacted copy of any such alternative acquisition proposal and any draft agreements or other materials received in connection with any such inquiry or alternative acquisition proposal. SYNNEX must keep Tiger Parent apprised of any material developments and negotiations, including any (i) amendment or modification to the economic terms of such alternative acquisition proposal or (ii) any other material amendment or modification to the terms us such proposal.

For purposes of the Merger Agreement, an alternative acquisition proposal means, with respect to SYNNEX or Tiger Parent, as applicable (other than the Merger contemplated by the Merger Agreement), any proposal or offer from third party, relating to

 

   

any acquisition of 20% or more of the consolidated assets of a party and its subsidiaries;

 

   

any acquisition twenty percent 20% or more of any class of equity or voting securities of a party or its subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of the party;

 

   

any tender offer or exchange offer that, if consummated, would result in such third party or its affiliates beneficially owning 20% or more of any class of equity or voting securities of a party or its subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of the party; or

 

   

a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving a party or its subsidiaries whose assets, individually or in the aggregate, constitute twenty percent 20% or more of the consolidated assets of the party, which would result in the stockholders of such party prior to such transaction ceasing to own at least 80%, directly or indirectly, of such party or its subsidiaries.

Change of Recommendation

Subject to the following paragraph, the Board may not change its recommendation that SYNNEX’ stockholders vote “FOR” the adoption of the Merger Agreement Proposal, the Share Issuance Proposal, the Authorized Share Charter Amendment Proposal and the Corporate Opportunity Charter Amendment Proposal. Under the Merger Agreement, a change in recommendation will occur if the Board (i) withholds, withdraws, modifies or qualifies in a manner adverse to Tiger Parent its recommendation, (ii) fails to make its recommendation in this proxy statement, (iii) adopts, approves, recommends or endorses an alternative acquisition proposal or publicly announces an intention to adopt, approve, recommend or endorse an alternative acquisition proposal, (iv) if an alternative acquisition proposal is made public, fails to publicly (and without qualification) disapprove of such alternative acquisition proposal or reaffirm its recommendation within 10 business days, or (v) publicly proposes to do any of the foregoing.

 

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Prior to obtaining the approval of SYNNEX’ stockholders, the Board may make a change of recommendation (i) in connection with a bona fide, written alternative acquisition proposal (with applicable thresholds in the definition of alternative acquisition proposal equal to 80% instead of 25%) that was not solicited in violation of the non-solicitation obligations described above, which the Board determines in good faith (after consulting with such outside advisors as it determines to be reasonably necessary) to be more favorable to SYNNEX and its stockholders than the Merger from a financial point of view and is reasonably likely to be consummated, in each case, taking into account all relevant factors (including the terms and conditions of such alternative acquisition proposal and the Merger Agreement and any changes to the terms of Merger Agreement proposed by Tiger Parent), which is referred to as a “superior acquisition proposal” or (ii) in response to a material event, change, effect, development or occurrence, subject to certain exceptions relating to regulatory approvals, that was not known to the Board prior to the date of the Merger Agreement and does not relate to or involve an alternative acquisition proposal, which we refer to as an “intervening event.”

Prior to making a change in recommendation, the Board must (i) provide Tiger Parent with four business days’ prior written notice of its intention to change its recommendation and a reasonable description of the event or circumstances giving rise to its determination to change its recommendation (including, if the change of recommendation is in response to a superior acquisition proposal, the latest material terms and conditions and the identity of the third party making the superior acquisition proposal, including any amendment or modification to the economic terms of, or any other material amendment or modification to, such superior acquisition proposal) and (ii) at the end of the four business days’ notice period, take into account any amendment or modification to the Merger Agreement proposed by Tiger Parent and determine in good faith, after consulting with such outside advisors as it determines reasonably necessary, that changing its recommendation would nevertheless be required to comply with its fiduciary duties (if there is a subsequent change to the economic terms of or any other material amendment to the superior acquisition proposal, it will be considered a new superior acquisition proposal, and the Board must provide Tiger Parent with a new two business days’ notice period).

Even if the Board changes its recommendation, unless the Merger Agreement is terminated, the special meeting of the stockholders of SYNNEX shall be convened and the Merger Agreement Proposal, the Share Issuance Proposal, the Authorized Share Charter Amendment Proposal and the Corporate Opportunity Charter Amendment Proposal shall be submitted to SYNNEX’ stockholders.

Efforts to Complete the Merger

SYNNEX and Tiger Parent have agreed to cooperate with each other and use their reasonable best efforts to (i) take, or cause to be taken, all necessary actions, and do or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by the Merger Agreement as promptly as practicable; (ii) make, or cause to be made, the registrations, declarations and filings required for HSR Act Clearance, the required filings, and the required consents, (iii) prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals, clearances and authorizations of all third parties and governmental entities which are necessary or advisable to consummate the transactions contemplated by the Merger Agreement, and to comply with the terms and conditions of all such permits, consents, approvals, clearances and authorizations of governmental entities, and (iv) seek to avoid or prevent the initiation of any investigation, claim, action, suit, arbitration, litigation or proceeding by or before any governmental entity challenging Merger Agreement or the consummation of the transactions contemplated by the Merger Agreement.

In furtherance of the parties’ reasonable best efforts, each of SYNNEX, Tiger Parent, and their respective subsidiaries, as applicable, to the extent required in order to obtain HSR Act Clearance, the required filings, and the required consents, or any other approvals of a governmental entity required to consummate the transactions contemplated by the Merger Agreement has agreed to (i) propose, negotiate or offer to effect, or consent or commit to, any sale, leasing, licensing, transfer, disposal, divestiture or other encumbrance, or holding separate, of any assets, licenses, operations, rights, product lines, businesses or interest therein; and (ii) take or agree to

 

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take any other action, agree or consent to, make any concession in respect of, or permit or suffer to exist any condition or requirement setting forth, any limitations or restrictions on freedom of actions with respect to, or its ability to retain, or make changes in, any assets, licenses, operations, rights, product lines, businesses or interest therein (which we collectively refer to as “regulatory concessions”). However, neither party nor its subsidiaries are required to, and neither party shall without the consent of the other party, agree or consent to a regulatory concession (including any divesture) that would be or would reasonably be expected to be, individually or in the aggregate, material to the combined company, taken as a whole, following the Merger.

SYNNEX and Tiger Parent have agreed to use reasonable best efforts (until the Merger Agreement is terminated) to (i) oppose or defend against any proceeding by any governmental entity to prevent or enjoin the consummation of the Merger or (ii) overturn any regulatory order by any governmental entity preventing consummation of the Merger, including by defending against or seeking to vacate, overturn, terminate or appeal any order that would prevent or materially delay the consummation of the Merger.

The parties have also agreed to not, and to cause their respective subsidiaries to not, acquire or agree to acquire, by merger or consolidation, or by purchasing the assets or equity of, any business, corporation, partnership, association, or business organization or division, or take any other similar action, if taking such action would reasonably be expected to (i) materially delay obtaining, or materially increase the risk of not obtaining, HSR Act Clearance, the required filings, the required consents, or any other authorizations, consents, orders, clearances or approvals of a governmental entity necessary to consummate the transactions contemplated by the Merger Agreement; (ii) increase, in any material respect, the risk of any governmental entity entering an order prohibiting the consummation of the transactions contemplated by the Merger Agreement; (iii) increase the risk, in any material respect, of not being able to remove an order, on appeal or otherwise, that prohibits the consummation of the transactions contemplated by the Merger Agreement; or (iv) prevent or materially delay the consummation of the transactions contemplated by the Merger Agreement.

Financing

Financing Not a Condition to the Merger

In connection with its entry into the Merger Agreement, SYNNEX entered into a Bridge Commitment Letter, under which Citi and certain other financing institutions joining thereto pursuant to the terms thereof committed to provide $7.5 billion in aggregate principal amount of senior unsecured commitments. On April 16, 2021, SYNNEX entered into a $5.0 billion takeout facility in the aggregate, pursuant to which the takeout lenders have committed to provide a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $3.5 billion and a senior unsecured term loan in an aggregate principal amount not to exceed $1.5 billion. Upon entry into the takeout facility, the commitments under the Bridge Commitment Letter were reduced by $5.0 billion to $2.5 billion. The applicable lenders’ obligations to fund their respective remaining commitments under the Bridge Commitment Letter and under the takeout facility are subject to several conditions as set forth in the Bridge Commitment Letter and in the takeout facility, including, among others, completion of the Merger, the non-occurrence of a material adverse effect on Tech Data, the accuracy of certain representations and warranties related to both SYNNEX and Tech Data and SYNNEX’ and Tech Data’s delivery of certain financial statements.

The availability of the term loan commitments under the Bridge Commitment Letter and the loans under the takeout facility are not conditions to SYNNEX’ or either Merger Sub’s respective obligations under the Merger Agreement.

Cooperation of SYNNEX

Until the closing or the termination of the Merger Agreement, SYNNEX has agreed to use its reasonable best efforts to take, or cause to be taken, all actions necessary, advisable and proper in connection with the

 

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arrangement, marketing and consummation of the issuance of any debt securities and/or the incurrence of any other Permanent Financing by SYNNEX that is reasonably acceptable to SYNNEX and Tiger Parent in lieu of the Financing.

Furthermore, in the event any funds required to satisfy the transaction uses become unavailable on the terms and conditions contemplated in the Commitment Letter or the financing agreements, SYNNEX has agreed to use reasonable best efforts to obtain Alternative Financing in an amount sufficient to allow it to satisfy the transaction uses, and to obtain the Alternative Commitment Letter on terms and conditions reasonably acceptable to SYNNEX and Tiger Parent.

SYNNEX has agreed to, and to cause its subsidiaries to, use reasonable best efforts to take, or cause to be taken, all actions necessary, proper or advisable to consummate and obtain the Financing in an amount sufficient (together with any other cash sources available to SYNNEX or its subsidiaries) to (i) repay, prepay, refinance, redeem or otherwise satisfy any indebtedness of SYNNEX, Tiger Parent or their respective subsidiaries contemplated or required to be satisfied in connection with the consummation of the transactions contemplated by the Merger Agreement, (ii) pay all fees and expenses of SYNNEX and its subsidiaries related to or arising out of the consummation of the transactions contemplated by the Merger Agreement that are required to be paid at closing, and (iii) pay all other amounts required to be paid by SYNNEX and its subsidiaries pursuant to or in connection with the Merger Agreement at closing (which we refer to collectively as the “transaction uses”), on terms and subject only to the conditions set forth in the Commitment Letter or the definitive agreements related to the Financing (which we refer to collectively, as the context may require for any applicable Financing, as the “financing agreements”).

In furtherance of the foregoing, SYNNEX has agreed to use its reasonable best efforts to (i) maintain in effect, until closing, the Commitment Letter or the financing agreements, as applicable, (ii) materially comply with the obligations that are set forth in the Commitment Letter and the financing agreements that are applicable to SYNNEX and satisfy on a timely basis all conditions precedent in the Commitment Letter and the financing agreements that are within its control, and (iii) to the extent necessary to satisfy the transaction uses, fully enforce its rights under the Commitment Letter and the financing agreements. SYNNEX has agreed that it will not, prior to the closing, release or consent to the termination of the obligations of the lenders under the Commitment Letter or the financing agreements without the consent of Tiger Parent (other than in accordance with the terms of the Commitment Letter as in effect on the date of the Merger Agreement).

SYNNEX has agreed to give Tiger Parent prompt written notice upon it obtaining knowledge of any of the following:

 

   

any material breach (or threatened in writing material breach) or default (or any event or circumstance that could reasonably be expected to give rise to any material breach or default) by any party to the Commitment Letter or the financing agreements;

 

   

any actual or threatened in writing withdrawal, repudiation or termination of the Financing by any of the lenders;

 

   

any material dispute or disagreement between or among any of the financing parties (on the one hand) and SYNNEX or any of its affiliates (on the other hand) party to the Commitment Letter or the financing agreements; and

 

   

any amendment or modification of, or waiver under, the Commitment Letter or the financing agreements.

Except for certain enumerated exceptions, SYNNEX has agreed to not, without the prior written consent of Tiger Parent, amend, modify, supplement, restate, substitute, replace, terminate, or agree to any waiver under the Commitment Letter or any financing agreement, which consent in the case of an amendment, modification or restatement shall not be unreasonably withheld or delayed so long as such amendment, modification or

 

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restatement would not (i) reasonably be expected to prevent, materially impede, or materially delay the consummation of the Merger and the other transactions contemplated by Merger Agreement, materially delay or impair the availability of the Financing or make the funding of the Financing at the closing less likely to occur, (ii) reduce the aggregate amount of the Financing such that SYNNEX would have insufficient funds to satisfy the transaction uses, (iii) contain additional or modified conditions precedent to the funding of the Financing relative to those set forth in the Commitment Letter as in effect as of the date of the Merger Agreement, or (iv) reasonably be expected to adversely impact the ability of SYNNEX to enforce or cause the enforcement of its rights under the Commitment Letter or the Financing Agreements

Cooperation of Tiger Parent

Subject to certain limitations and other caveats, Tiger Parent has agreed to use commercially reasonable efforts to (and cause its subsidiaries and their respective directors, officers, employees, agents and advisors to) cooperate with SYNNEX as necessary in connection with the arrangement of the Financing or any Permanent Financing as may be customary and reasonably requested by SYNNEX in writing, including:

 

   

making appropriate officers or members of the management team available for participation at reasonable times and locations mutually agreed in a reasonable number of meetings, lender and investor presentations, conference calls, road show presentations, due diligence sessions and meetings with rating agencies;

 

   

providing reasonable assistance in the preparation of any reasonable and customary bank information memoranda or private placement memoranda, rating agency presentations, marketing and/or syndication materials, in each case with respect to Tiger Parent and its subsidiaries;

 

   

providing reasonable assistance preparing a customary prospectus, offering memorandum, private placement memorandum or other document to be used in connection with an offering suitable for use in a customary road show relating to debt securities;

 

   

assisting SYNNEX in the preparation of customary pro forma financial statements and projections necessary in connection with the Financing and/or the Permanent Financing;

 

   

using commercially reasonable efforts to cause its accountants to cooperate in the provision of any customary “comfort” in respect of financial information of Tiger Parent or any of its subsidiaries included in any offering document;

 

   

assisting in the preparation and negotiation and execution and delivery of any definitive financing documents;

 

   

taking corporate and other actions reasonably necessary to permit the satisfaction of the conditions to the funding of the Financing and/or any Permanent Financing on the closing date; and

 

   

providing all material documentation and other information about Tiger Parent to satisfy applicable “beneficial ownership,” “know your customer” and anti-money laundering rules and regulations.

Employee Benefits Matters

Under the terms of the Merger Agreement, SYNNEX and Tiger Parent have agreed to cooperate in good faith to review, evaluate and analyzing SYNNEX’ and Tiger Parent’s respective employee benefit plans with a view towards developing appropriate new employee benefit plans, or selecting which if the parties’ respective existing employee benefit plans, that will apply with respect to employees of the combined company following the Merger (which we refer to collectively as the “new benefit plans”). The combined company will use its commercially reasonable efforts to cause the new benefit plans, to the extent permitted by applicable law, to (i) treat similarly situated employees on a substantially equivalent basis, taking into account all relevant factors, including duties, geographic location, tenure, qualifications and abilities, and (ii) not discriminate between employees who were previously employed by SYNNEX and its subsidiaries, on the one hand, and those employed by Tiger Parent and its subsidiaries, on the other hand, at the time of the Merger.

 

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During the six month period immediately following the Merger, the combined company shall provide each employee of Tiger Parent and each employee of SYNNEX (and their respective subsidiaries) who continues to remain employed by the combined company (each of whom we refer to as a “Legacy Employee”), with an annual base salary or wage rate and severance benefits (in the event that such Legacy Employee terminated during the six month period following the Merger), in each case, that are no less favorable than the greater of (i) such Legacy Employee’s salary or wage rate, as applicable, and severance entitlement as of immediately prior to the Merger or (ii) the salary or wage rate, as applicable, and severance entitlement in effect for similarly situated employees of the combined company.

Under the terms of the Merger Agreement, with respect to any new benefit plans that any Legacy Employees first become eligible to participate on or after the Merger, and that such Legacy Employee did not participate in prior to the Merger, the parties have agreed that the combined company will use commercially reasonable efforts to: (i) waive any preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the Legacy Employees and their eligible dependents (unless such preexisting conditions, exclusions or waiting periods would apply under the analogous SYNNEX or Tiger Parent employee benefit plan), (ii) provide the Legacy Employees and their eligible dependents with credit for any co-payments and deductibles paid prior to the Merger under a SYNNEX or Tiger Parent employee benefit plan in satisfying any applicable deductible or out-of-pocket requirements under any new benefit plans, and (iii) recognize all service of the Legacy Employees with Tiger Parent or SYNNEX and their respective Subsidiaries, as applicable, for all purposes in any new benefit plan. However, service recognition will not apply (a) to the extent it would result in duplication of benefits for the same period of service, (b) for purposes of benefit accrual under any defined benefit pension plan, (c) for purposes of any benefit plan that provides retiree welfare benefits, (d) to any benefit plan that is a frozen plan or provides grandfathered benefits, or (e) to the extent it would require any retroactive contributions.

Director and Officer Indemnification and Insurance

For at least six years after the Effective Time, the parties have agreed to cause the combined company to indemnify and hold harmless, and advance expenses to, such persons that are indemnified as of the date of the Merger Agreement by Tiger Parent pursuant to the organizational documents of Tiger Parent or its subsidiaries or any existing and specified indemnification agreements, and such persons that are indemnified as of the date of the Merger Agreement by SYNNEX pursuant to the organizational documents of SYNNEX or its subsidiaries or any existing and specified indemnification agreements against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, damages or liabilities incurred in connection with any threatened in writing or actual claim, action, suit, proceeding or investigation, arising out of the fact that such person is or was a director, officer or employee of SYNNEX, Tiger Parent, or their respective subsidiaries pertaining to matters existing or occurring at or prior to the Merger, including the transactions contemplated by the Merger Agreement.

Further, for at least six years after the Merger, the parties have agreed to cause the combined company to maintain in effect, insurance coverage equivalent to the coverage under the policies of directors’ and officers’ liability insurance maintained by Tiger Parent as of the date of the Merger Agreement with respect to claims arising at or prior to the Merger, subject to an annual cap of 300% of the annual premium of Tiger Parent’s insurance policy. If the annual premiums payable for such insurance coverage exceed the annual cap, the combined company will obtain a policy with the greatest coverage available for a cost equal to the annual cap. In the alternative, the combined company may, or at SYNNEX request, obtain a six year “tail” policy under Tiger Parent’s existing directors’ and officers’ insurance policy providing equivalent coverage to that described above; provided that the premium payable for such “tail” policy does not exceed the annual cap.

Equity Contribution

Tiger Parent has agreed to cause one or more of its applicable affiliates to make an equity contribution to Tiger Parent prior to the Effective Time of at least $500,000,000 in cash, in exchange for shares of Tiger Parent’s

 

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common stock (which shall in no way increase the Merger Consideration payable pursuant to the terms of the Merger Agreement).

Other Covenants

Under the terms of the Merger Agreement, SYNNEX and Tiger Parent made certain other covenants to and agreements with each other regarding various other matters including, but not limited to:

 

   

confidentiality and access to certain of each other’s information during the period prior to Merger;

 

   

actions to be taken (and not taken) by SYNNEX and Tiger Parent to ensure that the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, and the delivery of a tax opinion and certain tax certificates by the parties, if requested.

 

   

participation by Tiger Parent with SYNNEX in the defense or settlement of any stockholder litigation against SYNNEX relating to transactions contemplated by the Merger Agreement and the required consent of SYNNEX prior to certain settlements of any such litigation;

 

   

actions to be taken (and not taken) by SYNNEX and Tiger with respect to anti-takeover laws to ensure that the Merger and the other transactions contemplated by the Merger Agreement may be consummated as promptly as practicable on the terms contemplated by the Merger Agreement and to otherwise take such actions necessary to eliminate or minimize the effects of such anti-takeover laws on the Merger and the other transactions contemplated by the Merger Agreement;

 

   

actions to be taken by SYNNEX and Tiger Parent in connection with and with respect to Sections 16(a) and 16(b) of the Exchange Act;

 

   

resubmission of the Corporate Opportunity Charter Amendment Proposal to SYNNEX’ stockholders at the next annual meeting, if such proposal is not approved at the special meeting;

 

   

obtaining the resignations of the directors, managers and officers of Tiger Parent and its subsidiaries; and

 

   

providing certain financial statements of Tech Data by Tiger Parent to SYNNEX during the period prior to Merger.

Representations and Warranties

The Merger Agreement contains a number of representations and warranties made by the parties thereto that are subject in some cases to exceptions and qualifications (including exceptions to the effect that there have not been, and would not reasonably be expected to be, a “material adverse effect”). See the definition of “material adverse effect” below in the next section.

The representations and warranties made by each party under the Merger Agreement relate to, among other things:

 

   

due organization, valid existence, good standing and qualification to do business;

 

   

scope of business operations and subsidiaries;

 

   

accuracy of certain corporate documents made available to the other parties to the Merger Agreement;

 

   

capitalization;

 

   

options, restricted stock units and warrants;

 

   

ownership of equity or voting interests of each of the parties’ subsidiaries free and clear of liens;

 

   

corporate authorization of the Merger Agreement, the Investor Rights Agreement, and the transactions contemplated by the Merger Agreement and Investor Rights Agreement, and the valid and binding nature of the Merger Agreement and Investor Rights Agreement;

 

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the unanimous approval and recommendation by each of the Board, the board of directors of Merger Sub I, the board of directors of Merger Sub II, and the board of directors of Tiger Parent of the Merger Agreement, the Investor Rights Agreement and the consummation of the Merger;

 

   

the absence of any conflicts or violations of organizational documents and other material agreements or laws;

 

   

required consents and approvals from governmental entities;

 

   

documents filed with the SEC and financial statements;

 

   

the absence of undisclosed liabilities or off-balance-sheet arrangements;

 

   

internal controls and disclosure controls and procedures relating to financial reporting;

 

   

broker’s, finder’s and financial advisor’s fees;

 

   

the absence of certain changes or events;

 

   

the absence of certain legal proceedings, investigations and governmental orders;

 

   

tax matters;

 

   

employee benefit plans;

 

   

employment and labor matters;

 

   

compliance with laws, permits and regulatory bodies;

 

   

the absence of certain legal proceedings, investigations and governmental orders;

 

   

compliance with certain domestic and foreign corruption laws and customs and international trade laws;

 

   

privacy and data security;

 

   

material contracts and related party transactions;

 

   

government contracts;

 

   

environmental matters;

 

   

intellectual property;

 

   

potentially applicable takeover laws of any state, including any “moratorium,” “control share,” “fair price,” “takeover” or “interested stockholder law;

 

   

customers and suppliers; and

 

   

accuracy of information supplied or to be supplied in connection with this proxy statement.

The Merger Agreement also contains additional representations and warranties of SYNNEX, Merger Sub I, and Merger Sub II relating to, among other things, the following:

 

   

SYNNEX, Merger Sub I and Merger Sub II stockholder approval;

 

   

registration statements, prospectuses, reports, schedules, forms statements, certifications and other documents of SYNNEX required to be filed or furnished with the SEC;

 

   

opinion of Duff & Phelps that the Merger Consideration is fair, from a financial point of view, to SYNNEX; and

 

   

delivery of the Commitment Letter and other documents relating to the debt financing contemplated by the Commitment Letter.

 

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The representations and warranties of each of the parties to the Merger Agreement will expire upon the completion of the Merger.

Certain of the representations and warranties made by the parties are qualified as to “knowledge,” “materiality” or “material adverse effect” (as defined in the next section).

Material Adverse Effect

For purposes of the Merger Agreement, material adverse effect means, with respect to any person, any effect, change, event, circumstance, condition, occurrence or development that, would have a material adverse effect on the business, properties, results of operations or financial condition of such person and its subsidiaries taken as a whole, except that the impact of the following events, changes, effects, developments or occurrences are not included in determining whether there has been a material adverse effect:

 

   

any changes after March 22, 2021 in GAAP or applicable regulatory accounting requirements or official interpretations thereof;

 

   

any changes after March 22, 2021 in laws, rules or regulations of general applicability to companies in the industries in which such party and its subsidiaries operate, or interpretations thereof by courts;

 

   

any changes after March 22, 2021 in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic, market (including equity, credit and debt markets, as well as changes in interest rates) or other general industry-wide conditions affecting the industries in which such person and its subsidiaries operates;

 

   

any disasters (including hurricanes, tornadoes, floods, fires, explosions, earthquakes and weather-related events) or other acts of God, curfews, riots, demonstrations or public disorders or any escalation or worsening thereof;

 

   

any epidemic, pandemic or disease outbreak (including the COVID-19 pandemic) or worsening thereof, including commercially reasonable responses thereto

 

   

the announcement, existence or pendency of the Merger Agreement or the transactions contemplated thereby if, as to Tiger Parent, arising from the identity of SYNNEX or any of its affiliates, and if, as to SYNNEX, arising from the identity of Tiger Parent or any of its affiliates;

 

   

any decline in the trading price of such person’s common stock, if applicable, or the failure, in and of itself, to meet earnings projections, earnings guidance, budgets, expectations, estimates or internal financial forecasts, but not, in either case, the underlying causes thereof (unless such cause is otherwise excluded from being taken into account to in determining the existence of a material adverse effect);

 

   

any action taken (or omitted to be taken) by a party or any of its subsidiaries at the written request of the other party;

 

   

any action taken (or omitted to be taken) by a party or any of its subsidiaries that is expressly required to be taken (or omitted to be taken) pursuant to the Merger Agreement;

except, with respect to the matters listed in the forgoing first five bullets may be taken into account, to the extent the effects of such change are materially disproportionately adverse to the business, properties, results of operations or financial condition of such person and its subsidiaries, taken as a whole, as compared to other companies in the industries in which such person and its subsidiaries, taken as a whole, operate.

Amendment

The Merger Agreement may be amended in any and all respects, whether before or after obtainment of SYNNEX’ stockholder approval, only by the written agreement of each of the parties to the Merger Agreement;

 

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provided, however, (a) certain sections in the Merger Agreement related to the financing may not be amended, supplemented, waived or otherwise modified without the prior written consent of the financing parties, (b) the section of the Merger Agreement that provides certain covenants related to certain tax matters, which is described in the second bullet of “—Other Covenants” may not be amended, supplemented, waived or otherwise modified without the prior written consent of Tiger Holdings, and (c) after obtainment of SYNNEX’ stockholder approval, the Merger Agreement may not be amended in a manner that would require further stockholder approval under applicable law, without such further approval of SYNNEX’ stockholders.

Applicable Law; Jurisdiction

The Merger Agreement is governed by Delaware law.

Expenses

All fees and expenses incurred by the parties will be borne solely by the party that has incurred such fees and expenses, except that all filing and other fees paid to governmental entities in connection with the Merger and the other transactions contemplated by the Merger Agreement shall be split equally by SYNNEX and Tiger Parent, and, subject to the closing, SYNNEX will pay all transfer, stamp and documentary taxes imposed on parties or the combined company as a result of the consummation of the Merger.

 

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VOTING AGREEMENT

This section describes the material terms of the Voting Agreement entered into and executed among SYNNEX, Tiger Parent and certain stockholders of SYNNEX on March 22, 2021. The description in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the Voting Agreement, a copy of which is attached as Annex D to this proxy statement and is incorporated by reference herein in its entirety. This summary does not purport to be complete and may not contain all of the information about the Voting Agreement. You are encouraged to read the Voting Agreement carefully and in its entirety.

In connection with the execution of the Merger Agreement, on March 22, 2021, SYNNEX and Tiger Parent entered into a Voting Agreement with Silver Star Developments Ltd. and Peer Developments Ltd. (which we refer to collectively as “Major Stockholders”), who collectively owned approximately 17% of the total issued and outstanding shares of SYNNEX common stock as of such date (which we refer to as the “Voting Agreement Shares”).

Agreement to Not Transfer Shares; No Inconsistent Arrangements

Until the earliest of (i) the termination of the Merger Agreement, (ii) the time at which the Corporate Merger has become effective and (iii) the day after the conclusion of the special meeting of the stockholders of SYNNEX called to vote on the Share Issuance Proposal, the Authorized Share Charter Amendment Proposal, the Corporate Opportunity Charter Amendment Proposal and any other matters brought to vote at the special meeting (which will include, in this case, the Merger Agreement Proposal and the Adjournment Proposal) (which we refer to as the “Voting Agreement Expiration Time”), Major Stockholders agreed under the Voting Agreement, not to, among other things, sell, transfer, assign, pledge, give, tender in any tender or exchange offer or similarly dispose of any Voting Agreement Shares, subject to certain exceptions set forth below.

The agreement to not transfer the Voting Agreement Shares does not apply to transfers (i) to a member of a Major Stockholder’s immediate family, or to a trust for the benefit of the Major Stockholder, or otherwise for estate planning purposes, (ii) by will or under the laws of intestacy, (iii) pursuant to a qualified domestic order, (iv) to a partner, member or equity holder of a Major Stockholder, or (v) to an affiliate that controls, is controlled by or is under common control with a Major Stockholder, provided that in each case the transferee agrees to be bound by the same restrictions. In addition, each Major Stockholder may transfer up to 5% of such Major Stockholder’s Voting Agreement Shares.

Major Stockholders have agreed not to take any action that would have the effect of preventing, materially delaying or materially impairing such Major Stockholder from performing any of its obligations under the Voting Agreement.

Agreement to Vote the Covered Shares

Major Stockholders have agreed to vote, or cause the holder of record to vote, in favor of the Share Issuance Proposal, the Authorized Share Charter Amendment Proposal, the Corporate Opportunity Charter Amendment Proposal and any other matters brought to vote at the special meeting (which will include, in this case, the Merger Agreement Proposal and the Adjournment Proposal).

Further, Major Stockholders have agreed to vote against (i) any action or proposal in favor of an alternative transaction, (ii) any action or proposal that would reasonably be expected to result in any of SYNNEX’ closing conditions under the Merger Agreement not being fulfilled, and (iii) any action or proposal that is intended to or would reasonably be expected to impede, interfere with or materially and adversely affect the consummation of the closing under the Merger Agreement.

Major Stockholders agreed to execute and deliver at least two (2) business days prior to the relevant meeting, any proxy card or voting instructions it receives that is sent to stockholders of SYNNEX soliciting proxies.

 

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Representations and Warranties

The representations and warranties made by each party under the Voting Agreement relate to, among other things:

 

   

corporate authorization of execution of the Voting Agreement and absence of any consents or authorizations required to give effect to the Voting Agreement;

 

   

the absence of any conflicts or violations of material agreements or laws; and

 

   

the absence of certain legal action that would reasonably be expected to materially impar the ability of the party to perform its obligations under the Voting Agreement.

The Major Stockholders must also make additional representations and warranties relating to such Major Stockholder’s ownership of its Voting Agreement Shares.

Applicable Law; Jurisdiction

The Voting Agreement is governed by Delaware law.

Termination

The Voting Agreement will automatically terminate upon the Voting Agreement Effective Time.

 

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INVESTOR RIGHTS AGREEMENT

This section describes the material terms of the Investor Rights Agreement to be entered into and executed between SYNNEX and Tiger Holdings in connection with the closing of the Merger. The description in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the Investor Rights Agreement, a copy of which is attached as Annex E to this proxy statement and is incorporated by reference herein in its entirety. This summary does not purport to be complete and may not contain all of the information about the Investor Rights Agreement. You are encouraged to read the Investor Rights Agreement carefully and in its entirety.

In connection with, and as a condition to, closing and the consummation of the closing of the Merger, SYNNEX will enter into an Investor Rights Agreement with Tiger Holdings, the sole stockholder of Tiger Parent.

Board of Directors

The Investor Rights Agreement provides that following the closing, the Board shall be comprised of eleven directors, and Tiger Holdings shall have the right to nominate a certain number of directors, depending on the percentage of the outstanding shares of SYNNEX common stock held by Tiger Holdings or certain of its affiliates. Specifically, Tiger Holdings shall have the right to nominate:

 

  (i)

up to four directors, if it owns 30% or more of the outstanding shares of SYNNEX common stock, two of which must be “independent” directors, within the meaning of the NYSE;

 

  (ii)

up to three directors, if it owns between 20% and 30% of the outstanding shares of SYNNEX common stock, one of which must be an independent director;

 

  (iii)

up to two directors, if it owns between 10% and 20% of the outstanding shares of SYNNEX common stock;

 

  (iv)

up to one director, if it owns between 5% and 10% of the outstanding shares of SYNNEX common stock.

The initial directors nominated by Tiger Holdings shall be mutually acceptable to SYNNEX and any replacement director nominated by Tiger Holdings shall be approved by a majority of the directors on the Board that are not nominated by Tiger Holdings.

Of the remaining directors, who are not nominated by Tiger Holdings, one director shall be the then-serving Chief Executive Officer of SYNNEX, who will initially be Mr. Richard Hume, effective upon the consummation of the transaction contemplated by the Merger Agreement, and the other directors will be nominated in accordance with the provisions of SYNNEX’ bylaws and SYNNEX Certificate of Incorporation, provided that the members of the Board, as of immediately prior to the Merger, shall determine who shall remain on, or be appointed to, the Board following the Merger to hold the director positions that are not nominated by Tiger Holdings. Other than Mr. Hume and Mr. Polk, there have been no determinations as to who will serve on the Board following the Merger.

In the event the size of the Board is increased or decreased to other than eleven directors, the number of directors who may be nominated by Tiger Holdings will be proportionately increased or decreased to most closely equal the percentage of the Board originally composed of directors nominated by Tiger Holdings.

The Board may determine the composition and makeup of any committees of the Board. The lead independent director will also be selected by the Board.

Directors nominated by Tiger Holdings must fulfill their pro rata portion of any diversity requirements pursuant to law, stock exchange rules, or other regulatory requirements based on the percentage of the Board composed of directors nominated by Tiger Holdings.

 

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Directors’ and Officers’ Insurance

Under the Investor Rights Agreement, SYNNEX must maintain directors’ and officers’ liability insurance as determined by the Board. SYNNEX agrees that SYNNEX will be the primary indemnitor for SYNNEX directors.

Information Rights

Under the Investor Rights Agreement, for so long as Tiger Holdings and its affiliates own at least 10% of the common stock of SYNNEX, SYNNEX will provide Tiger Holdings with certain inspection and information rights, including, among other things, access to books and records of SYNNEX or its material subsidiaries, access to SYNNEX’ auditors and officers, access to quarter-ends reports, and information on significant corporate actions.

Certain Actions Requiring Approvals

SYNNEX or its material subsidiaries may not, without approval of a majority of directors on the Board, which must include the approval of a majority of the directors nominated by Tiger Holdings, amend any provision of its charter, bylaws or similar organizational documents in a way that adversely affects Tiger Holdings or its affiliates.

Restricted Activities; Voting

Tiger Holdings and its affiliates may not, without SYNNEX’ prior written consent:

 

   

make any statement or proposal to the Board or SYNNEX’ stockholders with respect to any business combination, tender offer, or sale of substantially all assets;

 

   

form any voting groups with any stockholder of SYNNEX other than solely among Tiger Holdings affiliates;

 

   

seek to control or change the management of the Board or SYNNEX;

 

   

acquire any additional shares of stock of SYNNEX entitled to vote; or

 

   

publicly disclose any arrangement relating to the foregoing or knowingly facilitate any of the foregoing.

Registration Rights

SYNNEX is required to, within two business days after the closing of the Merger, file an automatically effective registration statement registering the resale of the Registrable Securities (as defined below).

Under the Investor Rights Agreement, SYNNEX will provide Tiger Holdings and its affiliates with certain registration rights to require SYNNEX to register a sale of any Registrable Securities held by Tiger Holdings and its affiliates with a dollar value of $100 million or greater. Tiger Holdings will be entitled to make up to two registration demands in any rolling twelve-month period, including short form registration demands, that SYNNEX register such securities for sale under the Securities Act of 1933, as amended (which we refer to as “Securities Act”).

In addition, Tiger Holdings will have “piggy-back” registration rights to include its Registrable Securities in other registration statements filed by SYNNEX.

SYNNEX will bear the expenses incurred in connection with the filing of any such registration statements.

 

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“Registrable Securities” means shares of common stock of SYNNEX; provided that any Registrable Securities shall cease to be Registrable Securities when (a) a registration statement with respect to the sale of such Registrable Securities has been declared effective under the Securities Act and such Registrable Securities have been disposed of in accordance with the plan of distribution set forth in such registration statement, (b) such Registrable Securities are distributed pursuant to Rule 144 or (c) such Registrable Securities shall have been otherwise transferred and new certificates for them not bearing a legend restricting further transfer under the Securities Act shall have been delivered by SYNNEX; and provided, further, that any securities that have ceased to be Registrable Securities shall not thereafter become Registrable Securities and any security that is issued or distributed in respect of securities that have ceased to be Registrable Securities is not a Registrable Security.

Applicable Law; Jurisdiction

The Investor Rights Agreement is governed by Delaware law.

 

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SYNNEX UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The SYNNEX Unaudited Pro Forma Condensed Combined Financial Statements, which are referred to in this proxy statement as the Unaudited Pro Forma Financial Statements, presented below are derived from the continuing operations of the historical consolidated financial statements of SYNNEX and the parent company of Tech Data Corporation, Tiger Parent (AP) Corporation (which we refer to as “Tiger Parent”). The Unaudited Pro Forma Financial Statements are prepared as a business combination and SYNNEX has been treated as the acquirer in the merger for accounting purposes. The unaudited pro forma condensed combined statements of operations have been prepared as if SYNNEX’ acquisition of Tiger Parent had been completed on December 1, 2019, and the unaudited pro forma condensed combined balance sheet has been prepared as if SYNNEX’ acquisition of Tiger Parent had been completed on February 28, 2021.

The Unaudited Pro Forma Financial Statements are developed from and should be read in conjunction with the following historical consolidated financial statements and accompanying notes of SYNNEX filed with the Securities and Exchange Commission (which we refer to as the “SEC”): (a) the unaudited consolidated financial statements of SYNNEX contained in its Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2021; (b) the audited consolidated financial statements of SYNNEX contained in its Annual Report on Form 10-K for the year ended November 30, 2020; and (c) the audited consolidated financial statements of Tiger Parent as of January 31, 2021 and for each of the periods in the three-year period then ended, which are included herein below.

The SYNNEX column in the unaudited pro forma condensed combined statement of operations for the year ended November 30, 2020 was derived from continuing operations of the consolidated financial statements included in Form 10-K filed with the SEC on January 28, 2021. The Tiger Parent column in the unaudited pro forma condensed combined statements of operations for the twelve months ended January 31, 2021 was derived by combining the historical predecessor consolidated statement of operations for the period from February 1, 2020 to June 30, 2020 with the successor consolidated financial statements for the period from July 1, 2020 to January 31, 2021 included herein below. The Tiger Parent column in the unaudited pro forma condensed combined statements of operations for the three months ended January 31, 2021 was derived from the unaudited historical successor consolidated financial statements for the three months ended January 31, 2021.

SYNNEX and Tiger Parent have different fiscal years. SYNNEX’ fiscal year ends on November 30, whereas Tiger Parent’s fiscal year ends on January 31. The unaudited pro forma condensed combined balance sheet and statements of operations have been prepared utilizing period ends that differ by less than 93 days, as permitted by Rule 11-02 of Regulation S-X. The unaudited pro forma condensed combined balance sheet as of February 28, 2021 combines SYNNEX’ balance sheet as of February 28, 2021 with the Tiger Parent balance sheet as of January 31, 2021. The unaudited pro forma condensed combined statement of operations for the year ended November 30, 2020 combines continuing operations for the year ended November 30, 2020 for SYNNEX and the pro forma predecessor and successor operations for the twelve months ended January 31, 2021 for Tiger Parent. The unaudited pro forma condensed combined statement of operations for the three months ended February 28, 2021 combines continuing operations for the three months ended February 28, 2021 for SYNNEX and the successor results of operations for the three months ended January 31, 2021 for Tiger Parent.

As of the date of this proxy statement, SYNNEX has not completed the detailed valuation studies necessary to arrive at final estimates of the fair market value of Tiger Parent’s assets to be acquired and the liabilities to be assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform Tiger Parent to SYNNEX’ accounting policies. As indicated in Note 4 to the Unaudited Pro Forma Financial Statements, based on information currently available, SYNNEX has made certain adjustments to the historical book values of the assets and liabilities of Tiger Parent to reflect preliminary estimates of fair values necessary to prepare the Unaudited Pro Forma Financial Statements, with the excess of the purchase price over the adjusted historical net assets of Tiger Parent recorded as goodwill. Actual results may differ from these Unaudited Pro Forma Financial Statements once the Merger is completed and SYNNEX has determined the final purchase price

 

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for Tiger Parent, has completed the valuation studies necessary to finalize the required purchase price allocations and has identified any additional conforming accounting policy changes for Tiger Parent. There can be no assurance that such finalization will not result in material changes.

The Unaudited Pro Forma Financial Statements have been prepared to include factually supportable adjustments which give effect to events that are directly attributable to the merger regardless of whether they are expected to have a continuing impact on the combined results or are non-recurring.

The pro forma financial information has been prepared by SYNNEX for illustrative and informational purposes only, in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, “Amendments to Financial Disclosures About Acquired and Disposed Businesses,” as adopted by the SEC on May 21, 2020 (which we refer to as “Article 11”). The pro forma financial information, based on various adjustments and assumptions, is provided for illustrative purposes only and is not necessarily indicative of what SYNNEX’ consolidated statements of operations or consolidated statement of financial condition actually would have been had the Merger, the borrowings drawdown and the stock issuance been completed as of the dates presented or will be for any future periods. The Unaudited Pro Forma Financial Statements do not purport to project the future financial position or operating results of SYNNEX following the completion of the Merger and do not include the realization of cost savings from operating efficiencies, revenue synergies or other integration costs expected to result from the Tiger Parent acquisition. The pro forma financial information does not include adjustments to reflect any potential synergies or dis-synergies cost in connection with the Merger.

 

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SYNNEX Corporation

Unaudited Pro Forma Condensed Combined Balance Sheet

(currency and share amounts in thousands, except per share amounts)

 

     Historical                            
     February 28,
2021
    January 31,
2021
     Pro forma            Pro forma        
     SYNNEX     Tiger Parent      adjustments     Note      combined     Note  

ASSETS

              

Current assets:

              

Cash and cash equivalents

   $ 1,443,748     $ 832,976      $ (1,093,830     5A      $ 1,182,894    

Accounts receivable, net

     2,381,064       6,267,052        —            8,648,116    

Receivables from vendors, net

     261,982       —          808,000       5D        1,069,982    

Inventories

     2,556,716       2,772,302        —            5,329,018    

Other current assets

     161,101       392,145        —            553,246    
  

 

 

   

 

 

    

 

 

      

 

 

   

Total current assets

     6,804,611       10,264,475        (285,830        16,783,256    

Property and equipment, net

     155,869       162,032        —            317,901    

Goodwill

     423,989       1,543,355        3,955,797       5B        5,923,141    

Intangible assets, net

     176,554       2,928,996        —            3,105,550       5C  

Deferred tax assets

     36,303       —          9,222       5D        45,525    

Other assets, net

     128,707       570,536        (9,222     5D        632,021    
          (58,000     4       
  

 

 

   

 

 

    

 

 

      

 

 

   

Total assets

   $ 7,726,033     $ 15,469,394      $ 3,611,967        $ 26,807,394    
  

 

 

   

 

 

    

 

 

      

 

 

   

LIABILITIES AND EQUITY

              

Current liabilities:

              

Borrowings, current

   $ 135,804     $ 132,120      $ (132,120     5A      $ 135,804    

Accounts payable

     3,116,095       7,950,394        808,000       5D        11,874,489    

Other accrued liabilities

     654,337       1,202,608        42,000       5E        1,898,945    

Income taxes payable

     62,073       —          (15,406     5E        46,667    
  

 

 

   

 

 

    

 

 

      

 

 

   

Total current liabilities

     3,968,308       9,285,122        702,474          13,955,904    

Long-term borrowings

     1,496,970       2,193,522        188,915       5A        3,970,573    
          88,136       4       
          3,030       5A       

Other long-term liabilities

     124,341       953,477        (504,550     5D        573,268    

Deferred tax liabilities

     7,116       —          504,550       5D        750,042    
          239,134       5F       
          (758     5A       
  

 

 

   

 

 

    

 

 

      

 

 

   

Total liabilities

     5,596,735       12,432,121        1,220,931          19,249,787    
  

 

 

   

 

 

    

 

 

      

 

 

   

Stockholders’ equity:

              

Common stock

     54       —          44       3        98    

Additional paid-in capital

     1,596,598       2,755,227        (2,755,227     5G        7,094,354    
          5,497,756       3       

Treasury stock

     (192,010     —          —            (192,010  

Accumulated other comprehensive income (loss)

     (179,973     275,528        (275,528     5G        (179,973  

Retained earnings

     904,629       6,518        (6,518     5G        835,138    
          (36,750     5E       
          (30,469     5I       
          (2,272     5A       
  

 

 

   

 

 

    

 

 

      

 

 

   

Total stockholders’ equity

     2,129,298       3,037,273        2,391,036          7,557,607    
  

 

 

   

 

 

    

 

 

      

 

 

   

Total liabilities and equity

   $ 7,726,033     $ 15,469,394      $ 3,611,967        $ 26,807,394    
  

 

 

   

 

 

    

 

 

      

 

 

   

(amounts may not add due to rounding)

The accompanying notes are an integral part of the Unaudited Pro Forma Condensed Combined Financial Statements.

 

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SYNNEX Corporation

Unaudited Pro Forma Condensed Combined Statement of Operations

(currency and share amounts in thousands, except per share amounts)

 

     Historical                         
     Three months ended                         
     February 28,
2021
    January 31,
2021
    Pro forma
adjustments
           Pro forma
combined
     
     SYNNEX     Tiger Parent     Note     Note

Revenue

   $ 4,939,014     $ 10,952,234     $ —          $ 15,891,248    

Cost of revenue

     (4,634,447     (10,309,936     —            (14,944,383  
  

 

 

   

 

 

   

 

 

      

 

 

   

Gross profit

     304,567       642,298       —            946,865    

Selling, general and administrative expenses

     (162,820     (512,790     2,057       5H        (673,553  

Gain on bargain purchase

     —         1,957            1,957    
  

 

 

   

 

 

   

 

 

      

 

 

   

Operating income

     141,748       131,465       2,057          275,269    

Interest expense and finance charges, net

     (22,838     (39,953     20,877       5I        (41,914  

Other income (expense), net

     (1,333     (3,120     —            (4,453  
  

 

 

   

 

 

   

 

 

      

 

 

   

Income from continuing operations before income taxes

     117,576       88,392       22,934          228,902    

Provision for income taxes

     (29,754     (23,595     (5,733     5J        (59,082  
  

 

 

   

 

 

   

 

 

      

 

 

   

Income from continuing operations

   $ 87,822     $ 64,797     $ 17,201        $ 169,820    
  

 

 

   

 

 

   

 

 

      

 

 

   

Earnings per common share from continuing operations:

             

Basic

   $ 1.70            $ 1.78     5K
  

 

 

          

 

 

   

Diluted

   $ 1.69            $ 1.77     5K
  

 

 

          

 

 

   

Weighted-average common shares outstanding:

             

Basic

     51,145         44,000       5K        95,145    
  

 

 

     

 

 

      

 

 

   

Diluted

     51,563         44,000       5K        95,563    
  

 

 

     

 

 

      

 

 

   

(amounts may not add due to rounding)

The accompanying notes are an integral part of the Unaudited Pro Forma Condensed Combined Financial Statements.

 

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SYNNEX Corporation

Unaudited Pro Forma Condensed Combined Statement of Operations

(currency and share amounts in thousands, except per share amounts)

 

     Historical                       
     Twelve months ended                       
     November 30,
2020
    January 31,
2021
                      
     SYNNEX     Tiger Parent
(Pro forma
combined
Predecessor
and Successor)
    Pro forma
adjustments
    Note    Pro forma
combined
    Note

Revenue

   $ 19,977,150     $ 36,372,614     $ —          $ 56,349,764    

Cost of revenue

     (18,783,292     (34,181,277     —            (52,964,569  
  

 

 

   

 

 

   

 

 

      

 

 

   

Gross profit

     1,193,858       2,191,337       —            3,385,195    

Selling, general and administrative expenses

     (672,516     (2,033,805     (24,639   5C      (2,768,160  
         (42,000   5E     
         4,800     5H     

Gain on bargain purchase

     —         30,194       —            30,194    
  

 

 

   

 

 

   

 

 

      

 

 

   

Operating income

     521,342       187,726       (61,839        647,229    

Interest expense and finance charges, net

     (79,023     (121,424     4,469     5I      (195,978  

Other income (expense), net

     (6,172     (13,497     (3,030   5A      (22,699