Td Synnex Corp DEFA14A, filed Jun 25, 2021
Td Synnex Corp (SNX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 22, 2021
(Exact name of registrant as specified in its charter)
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Delaware |
001-31892 |
94-2703333 |
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
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44201 Nobel Drive, Fremont, California |
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94538 |
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(Address of principal executive offices) |
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(Zip Code) |
(510) 656-3333
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock, par value $0.001 per share |
SNX |
The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
EXPLANATORY NOTE
As previously disclosed, on March 22, 2021, SYNNEX Corporation (“SYNNEX”) entered into an Agreement and Plan of Merger (which, as it may be amended from time to time, the “Merger Agreement”), with Spire Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of SYNNEX (“Merger Sub I”), Spire Sub II, LLC, a Delaware limited liability company and a wholly owned subsidiary of SYNNEX (“Merger Sub II”) and Tiger Parent (AP) Corporation, a Delaware corporation (the “Company”), pursuant to which, subject to the terms and conditions of the Merger Agreement, Merger Sub I will merge with and into the Company (the “Initial Merger”), with the Company surviving the Initial Merger as a wholly owned subsidiary of SYNNEX, followed immediately by the merger of the Company, as the surviving corporation with and into Merger Sub II (the “Subsequent Merger” and together with the Initial Merger, the “Merger”), with Merger Sub II surviving the Subsequent Merger as a wholly owned subsidiary of SYNNEX.
On June 9, 2021, SYNNEX filed its definitive proxy statement (the “Proxy Statement”) to obtain stockholder approval for the transactions contemplated by the Merger Agreement.
SYNNEX’ board of directors continues to unanimously recommend that its stockholders 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.
Item 8.01.Other Events.
After the filing of the Proxy Statement, a fourth complaint regarding the Merger was filed.
Michael Kent v. SYNNEX Corp., et al., No. 1:21-cv-00888, was filed on June 22, 2021 in the United States District Court for the District of Delaware. 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 definitive 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.
The foregoing summary is qualified in its entirety by reference to the full text of the complaint which is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
SYNNEX has also received stockholder demand letters purporting to challenge the Merger. To date, none of those letters has resulted in litigation.
Additional Information and Where to Find It
In connection with the proposed transaction between SYNNEX and Tiger Parent (AP) Corporation, the parent corporation of Tech Data, SYNNEX has filed relevant materials with the Securities and Exchange Commission (the “SEC”), including a proxy statement on Schedule 14A. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. INVESTORS AND STOCKHOLDERS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE THEREIN) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION THAT SYNNEX WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND THE PARTIES TO THE TRANSACTION. The definitive proxy statement, the preliminary proxy statement, and other relevant materials in connection with the transaction (when they become available) and any other documents filed by SYNNEX with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov).
SYNNEX and its directors and executive officers may be deemed, under SEC rules, to be participants in the solicitation of proxies from SYNNEX’ stockholders in connection with the transaction. Information regarding the interests of such individuals in the proposed transaction was included in the proxy statement relating to such transaction when it is filed with the SEC. You may obtain information about SYNNEX’ executive officers and directors in SYNNEX’ definitive proxy statement for its 2021 annual meeting of stockholders, which was filed with the SEC on February 10, 2021. To the extent holdings of such participants in SYNNEX’ securities are not reported, or have changed since the amounts described in the proxy statement for the 2021 annual meeting of stockholders, such changes have been reflected on Statements of Change in Ownership on Form 4 filed with the SEC. These documents may be obtained free of charge from the SEC’s website at www.sec.gov and SYNNEX’ website at http://ir.synnex.com.
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Forward-Looking Statements
DISCLOSURE NOTICE: This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, related to SYNNEX and the proposed acquisition of Tiger Parent (AP) Corporation, the parent entity of Tech Data by SYNNEX. All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws. These forward-looking statements involve uncertainties that could significantly affect the financial or operating results of SYNNEX or the combined company. These forward-looking statements may be identified by terms such as “anticipate”, “believe”, “foresee”, “expect”, “intend”, “plan”, “may”, “will”, “could” and “should” and the negative of these terms or other similar expressions. Forward-looking statements in this document include, among other things, statements about the potential benefits of the proposed acquisition, including future financial and operating results, plans, objectives, expectations and intentions; the anticipated timing of closing of the acquisition; and the methods SYNNEX will use to finance the cash portion of the transaction. In addition, all statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to creating value for stockholders, benefits of the proposed transactions to customers, vendors, employees, stockholders and other constituents of the combined company, integrating the companies, synergies, expanded global footprint, operating improvements, financial strength and investment power, expanded offerings, capital structure, dividends, support from customers and vendors, cost benefits and purchasing efficiencies, post-closing growth expectations and the expected timetable for completing the proposed transaction — are forward-looking statements. These forward-looking statements involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Risks and uncertainties include, among other things, risks related to the satisfaction of the conditions to closing the acquisition (including the failure to obtain necessary regulatory and stockholder approval) in the anticipated timeframe or at all; risks related to the ability to realize the anticipated benefits of the acquisition, including the possibility that the expected benefits from the proposed acquisition will not be realized or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully; disruption from the transaction making it more difficult to maintain business, contractual and operational relationships; the unfavorable outcome of any legal proceedings that have been or may be instituted against SYNNEX, Tech Data, Tiger Parent (AP) Corporation or the combined company; failure to protect proprietary or personally identifiable data against unauthorized access or unintended release; the ability to retain key personnel; negative effects of this announcement or the consummation of the proposed acquisition on the market price of the capital stock of SYNNEX, and on SYNNEX’ and Tech Data’s operating results; significant transaction costs, fees, expenses and charges; unknown liabilities; the risk of litigation and/or regulatory actions related to the proposed acquisition; the financing of the transaction; other business effects, including the effects of industry, market, economic, political, regulatory or world health conditions (including new or ongoing effects of the COVID-19 pandemic); future exchange and interest rates; changes in tax and other laws, regulations, rates and policies; future business combinations or disposals; and competitive developments.
A further description of risks and uncertainties relating to SYNNEX can be found in its most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and available at www.sec.gov.
SYNNEX does not intend to update the forward-looking statements contained in this document as the result of new information or future events or developments, unless otherwise required by law.
Item 9.01Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No. |
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Description |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: June 25, 2021 |
SYNNEX CORPORATION |
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By: |
/s/ Simon Y. Leung |
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Simon Y. Leung Senior Vice President, General Counsel and Corporate Secretary |
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UNITED STATES DISTRICT COURT
DISTRICT OF DELAWARE
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MICHAEL KENT
Plaintiff,
v.
SYNNEX CORPORATION, KEVIN MURAI, DWIGHT STEFFENSEN, DENNIS POLK, FRED BREIDENBACH, LAURIE SIMON HODRICK, HAU LEE, MATTHEW MIAU, ANN VEZINA, THOMAS WURSTER, DUANE ZITZNER, and ANDREA ZULBERTI,
Defendants.
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Case No. ____________
COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
JURY TRIAL DEMANDED |
Plaintiff Michael Kent (“Plaintiff”), on behalf of himself and all others similarly situated, upon information and belief, including an examination and inquiry conducted by and through his counsel, except as to those allegations pertaining to Plaintiff, which are alleged upon personal belief, alleges the following for his Complaint:
NATURE OF THE ACTION
1.Plaintiff brings this action against SYNNEX Corporation (“SYNNEX” or the “Company”) and the members of SYNNEX’s Board of Directors (the “Board” or the “Individual Defendants”) for their violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78n(a), 78t(a), and U.S. Securities and Exchange Commission (“SEC”) Rule 14a-9, 17 C.F.R. § 240.14a-9. By the action, Plaintiff seeks to enjoin the vote on a proposed transaction, pursuant to which SYNNEX will merge with Tech Data Corporation (“Tech Data”) through Tiger Parent (AP) Corporation (“Tiger Parent”), Spire Sub I, Inc. (“Merger Sub I”), and Spire Sub II, LLC (“Merger Sub II”) (the “Proposed Transaction”).
2.On March 22, 2021, SYNNEX and Tech Data jointly announced that they had entered into an Agreement and Plan of Merger dated March 22, 2021 (the “Merger Agreement”). The Merger Agreement provides that the aggregate consideration for all issued and outstanding shares of Tiger Parent 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. (“Tiger Holdings”), Tiger Parent’s sole stockholder and an affiliate of Apollo Global Management, Inc. (“Apollo”)), to Tiger Parent, and (ii) 44 million shares of SYNNEX common stock (the “Merger Consideration”). Following completion of the Proposed Transaction, SYNNEX shareholders will own approximately 55% of the combined entity, with Apollo owning approximately 45%.
3.On June 9, 2021, SYNNEX filed a Schedule 14A Definitive Proxy Statement (the “Proxy Statement”) with the SEC. The Proxy Statement, which recommends that SYNNEX stockholders vote in favor of the Proposed Transaction, omits or misrepresents material information critical to stockholders’ decision whether to approve the Proposed Transaction. The failure to adequately disclose such material information constitutes a violation of Sections 14(a) and 20(a) of the Exchange Act.
4.It is imperative that the material information omitted from the Proxy Statement is disclosed to the Company’s stockholders prior to the forthcoming stockholder vote so that they can properly exercise their corporate suffrage rights.
5.For these reasons and as set forth in detail herein, Plaintiff seeks to enjoin defendants from taking any steps to consummate the Proposed Transaction unless and until the material information discussed below is disclosed to the Company’s stockholders or, in the event the Proposed Transaction is consummated, to recover damages resulting from the defendants’ violations of the Exchange Act.
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JURISDICTION AND VENUE
6.This Court has jurisdiction over the claims asserted herein for violations of Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder pursuant to Section 27 of the Exchange Act, 15 U.S.C. § 78aa, and 28 U.S.C. §1331 (federal question jurisdiction).
7.The Court has jurisdiction over defendants because each defendant is either a corporation that conducts business in and maintains operations in this District, or is an individual who has sufficient minimum contacts with this District so as to render the exercise of jurisdiction by this Court permissible under traditional notions of fair play and substantial justice.
8.Venue is proper in this District pursuant to 28 U.S.C. § 1391 because defendants are found or are inhabitants or transact business in this District.
THE PARTIES
9.Plaintiff is, and has been at all times relevant hereto, a continuous stockholder of SYNNEX.
10.Defendant SYNNEX is a Delaware corporation, with its principal executive offices located at 44201 Nobel Drive, Fremont, California 94538. The Company is a leading provider of a comprehensive range of distribution, systems design, and integration services. SYNNEX’s shares trade on the New York Stock Exchange under the ticker symbol “SNX.”
11.Defendant Kevin Murai (“Murai”) has been Chairman of the Board since March 2018, and a director of the Company since March 2008. Defendant Murai previously served as President and Chief Executive Officer (“CEO”) of the Company from March 2008 to March 1, 2018, and as Co-CEO from March 2008 until December 2008.
12.Defendant Dwight Steffensen (“Steffensen”) has been Lead Director since March 2018 and a director of the Company since February 2002. Defendant Steffensen also served as
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Lead Director from March 2006 to June 2010 and as Chairman of the Board from June 2010 until March 2018.
13.Defendant Dennis Polk (“Polk”) has been President and CEO since March 2018 and a director of the Company since February 2012. Defendant Polk joined SYNNEX in 2002 as Senior Vice President (“SVP”) of Corporate Finance and in the same year became Chief Financial Officer (“CFO”). Defendant Polk became Chief Operating Officer (“COO”) in 2006 until becoming President and CEO.
14.Defendant Fred Breidenbach (“Breidenbach”) has been a director of the Company since February 2003.
15.Defendant Laurie Simon Hodrick (“Hodrick”) has been a director of the Company since April 2019.
16.Defendant Hau Lee (“Lee”) has been a director of the Company since February 2012.
17.Defendant Matthew Miau (“Miau”) has been a director of the Company since 1992. Defendant Miau previously served as the Chairman of the Board from 1992 to 2008.
18.Defendant Ann Vezina (“Vezina”) has been a director of the Company since February 2017.
19.Defendant Thomas Wurster (“Wurster”) has been a director of the Company since February 2012.
20.Defendant Duane Zitzner (“Zitzner”) has been a director of the Company since May 2007.
21.Defendant Andrea Zulberti (“Zulberti”) has been a director of the Company since September 2010.
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22.Defendants identified in paragraphs 11-21 are referred to herein as the “Board” or the “Individual Defendants.”
SUBSTANTIVE ALLEGATIONS
The Proposed Transaction
23.On March 22, 2021, SYNNEX and Tech Data jointly announced, in relevant part:
FREMONT, Calif. and CLEARWATER, Fla., March 22, 2021 – SYNNEX Corporation (NYSE: SNX) and Tech Data today announced they have entered into a definitive merger agreement under which SYNNEX and Tech Data will combine in a transaction valued at approximately $7.2 billion, including net debt. The combined company, with approximately $57 billion in estimated pro forma annual revenues and a team of over 22,000 associates and colleagues, will provide customers and vendors with expansive reach across products, services, and geographies to accelerate technology adoption.
“We are excited to partner with a world-class industry leader like Tech Data and believe that this combination will benefit all our stakeholders,” said Dennis Polk, SYNNEX President and CEO. “This transaction allows for accelerated revenue and earnings growth, an expanded global footprint, and the ability to drive significant operating improvements while continuing to create shareholder value. We look forward to working with the talented colleagues at Tech Data and expect our combined business will create the opportunity for team members to produce the highest levels of service to our partners.”
“This is transformational for Tech Data, SYNNEX and the entire technology ecosystem. Together, we will be able to offer our customers and vendors exceptional reach, efficiency, and expertise, redefining the experience and value they receive,” said Rich Hume, Tech Data CEO. “The combined company will also benefit from significant financial strength to invest in its core growth platform as well as next generation cybersecurity, cloud, data, and IoT technologies, which are experiencing explosive growth due to work from home and return to office trends. We could not have reached this milestone without the hard work of our colleagues, and we look forward to working together with the SYNNEX team to seamlessly bring our companies together and to create meaningful value for all our stakeholders.”
Tech Data currently is wholly owned by funds managed by affiliates of Apollo Global Management, Inc. (NYSE: APO) (the “Apollo Funds”) and their co-investors.
Apollo Senior Partner and Co-Head of Private Equity Matt Nord and Apollo Partner Robert Kalsow-Ramos said, “When we acquired Tech Data, we saw the tremendous potential for transformative growth and long-term value creation. This transaction
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will accelerate the momentum that was already underway by uniting two outstanding companies for greater scale and financial strength to lead the industry. We are excited to remain a part of the new company’s continued success.”
Compelling Strategic Benefits
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Creates a diversified global solutions aggregator with significant breadth and depth of capabilities. The combined company will have a global footprint that serves more than 100 countries across the Americas, Europe and Asia-Pacific regions, and a broad, diversified portfolio of more than 200,000 product and solutions offerings. This meaningful scale will provide increased value and purchasing efficiencies to the combined company’s 150,000 customers and more than 1,500 vendors and enable it to accelerate technology adoption and attract the world’s most innovative OEMs. |
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Capitalizes on premier core growth platforms and establishes best-in-class product offerings in next generation, high-growth areas. The transaction combines each company’s core growth platforms to 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 companies’ highly complementary product line cards and global distribution platform provide diversified revenue streams and cross selling opportunities, including the ability to bring a comprehensive everything-as-a-service (EaaS) offerings to the market. |
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Brings together companies with complementary cultures and a commitment to being an employer of choice in the global IT industry. Both SYNNEX and Tech Data have corporate cultures centered on innovation, agility, and customer service. These shared principles, as well as the expertise and talent from both organizations, will support a smooth integration following the close of the transaction. |
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Key Transaction Details
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Under the terms of the agreement, Apollo Funds will receive an aggregate of 44 million shares of SYNNEX common stock plus the refinancing of existing Tech Data net debt and redeemable preferred shares of approximately $2.7 billion. |
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Upon closing of the transaction, SYNNEX shareholders will own approximately 55% of the combined entity, with Apollo Funds owning approximately 45%. |
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Rich Hume will lead the combined company as CEO. Dennis Polk will be Executive Chair of the Board of Directors and will take an active role in the ongoing strategy and integration of the business, among other responsibilities. |
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The combined company will have an eleven-member board, including Hume, with six individuals appointed by SYNNEX and with Apollo Funds |
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to have Board designation rights based on ownership, initially including four total directors, two of whom will be independent. |
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Non-GAAP diluted EPS accretion of more than 25% is expected in year one post close, with further accretion expected in year two. |
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Net optimization and synergy benefits of $100 million are expected in the first year after closing, achieving a minimum of $200 million by the end of the second year. |
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The combined company will benefit from a strong financial foundation and an investment grade profile. Based on LTM pro-forma adjusted EBITDA of approximately $1.5 billion and expected combined debt of approximately $4.0 billion at close, debt-to-adjusted EBITDA is expected to be approximately 2.7x at transaction close and is expected to decline to approximately 2x within 12 months. |
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The transaction is expected to close in the second half of calendar year 2021, subject to the satisfaction of customary closing conditions, including approval by SYNNEX stockholders and regulatory approvals.
MiTAC Holdings Corporation and its affiliates, which collectively owned approximately 17% of SYNNEX shares as of January 22, 2021, have agreed to vote their shares in favor of the transaction. Until the transaction is completed, the companies will continue to operate independently.
The Proxy Statement Contains Material Misstatements or Omissions
24.Defendants filed a materially incomplete and misleading Proxy Statement with the SEC and disseminated it to SYNNEX’s stockholders. The Proxy Statement misrepresents or omits material information that is necessary for the Company’s stockholders to make an informed decision whether to vote in favor of the Proposed Transaction.
25.Specifically, as set forth below, the Proxy Statement fails to provide Company stockholders with material information or provides them with materially misleading information concerning: (a) Tech Data’s financial projections; (b) the background of the Proposed Transaction; and (c) Company insiders’ potential conflicts of interest.
Material Omissions Concerning Tech Data’s Financial Projections
26.The Proxy Statement omits material information regarding Tech Data’s financial projections including Tech Data’s initial financial projections that SYNNEX management
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reviewed at the January 14, 2021 Board meeting, including (a) the assumptions underlying the initial projections; (b) the date the initial projections were created; and (c) the changes made to the initial projections that are reflected in the updated projections SYNNEX management on February 24, 2021.
27.The Proxy Statement also fails to disclose whether the updated Tech Data projections provided to SYNNEX management on February 24, 2021 were the same set that the Company’s financial advisor, Duff & Phelps, LLC (“Duff & Phelps”) relied upon for its fairness opinion.
28.The omission of this material information renders the statements in the “Certain SYNNEX Projections” and “Background of the Merger” sections of the Proxy Statement false and/or materially misleading in contravention of the Exchange Act.
Material Omissions Concerning the Background of the Proposed Transaction
29.The Proxy Statement omits material information regarding the background of the Proposed Transaction including with respect to the renegotiation of the purchase price contemplated by the Board.
30.The Proxy Statement fails to disclose: (a) the details of the renegotiation that the Board was considering at its February 18, February 24, and March 2, 2021 Board meetings; (b) the Board’s reason for contemplating a renegotiation of the deal terms, including the underlying facts and circumstances that led to the Board’s conclusion that a renegotiation would be necessary; and (c) clarification that the $500 million payment by Apollo was the renegotiation contemplated by the Board.
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31.The omission of this material information renders the statements in the “Background of the Merger” section of the Proxy Statement false and/or materially misleading in contravention of the Exchange Act.
Material Omissions Concerning Company Insiders’ Potential Conflicts of Interest
32.The Proxy Statement fails to disclose potential conflicts of interest faced by the Company’s insiders including the details of all employment and retention-related discussions and negotiations that occurred between Rich Hume (“Hume”), the CEO of Tech Data, and defendant Polk beginning in October 2020, and particularly their meetings on December 4, 2020 and December 22, 2020, and any additional discussions between Tech Data, Apollo and SYNNEX’s executive officers and directors, including who participated in all such communications, when they occurred and their content.
33.The Proxy Statement also fails to disclose whether any of Tech Data’s and Apollo’s indication of interests or counterproposals mentioned management retention in the combined company following the Proposed Transaction.
34.Communications regarding post-transaction employment and merger-related benefits during the negotiation of the underlying transaction must be disclosed to stockholders. This information is necessary for stockholders to understand potential conflicts of interest of management and the Board, as that information provides illumination concerning motivations that would prevent fiduciaries from acting solely in the best interests of the Company’s stockholders.
35.The omission of this material information renders the statements in the “Background of the Merger” section of the Proxy Statement false and/or materially misleading in contravention of the Exchange Act.
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36.The Individual Defendants were aware of their duty to disclose the above-referenced omitted information and acted negligently (if not deliberately) in failing to include this information in the Proxy Statement. Absent disclosure of the foregoing material information prior to the stockholder vote on the Proposed Transaction, Plaintiff and the other stockholders of SYNNEX will be unable to make an informed voting decision in connection with the Proposed Transaction and are thus threatened with irreparable harm warranting the injunctive relief sought herein.
CLAIMS FOR RELIEF
COUNT I
Claims Against All Defendants for Violations of Section 14(a) of the
Exchange Act and Rule 14a-9 Promulgated Thereunder
37.Plaintiff repeats all previous allegations as if set forth in full.
38.During the relevant period, defendants disseminated the false and misleading Proxy Statement specified above, which failed to disclose material facts necessary to make the statements, in light of the circumstances under which they were made, not misleading in violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder.
39.By virtue of their positions within the Company, the defendants were aware of this information and of their duty to disclose this information in the Proxy Statement. The Proxy Statement was prepared, reviewed, and/or disseminated by the defendants. It misrepresented and/or omitted material facts, including material information about (a) Tech Data’s financial projections; (b) the background of the Proposed Transaction; and (c) Company insiders’ potential conflicts of interest. The defendants were at least negligent in filing the Proxy Statement with these materially false and misleading statements.
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40.The omissions and false and misleading statements in the Proxy Statement are material in that a reasonable stockholder would consider them important in deciding how to vote on the Proposed Transaction or seek to exercise their appraisal rights.
41.By reason of the foregoing, the defendants have violated Section 14(a) of the Exchange Act and SEC Rule 14a-9(a) promulgated thereunder.
42.Because of the false and misleading statements in the Proxy Statement, Plaintiff is threatened with irreparable harm, rendering money damages inadequate. Therefore, injunctive relief is appropriate to ensure defendants’ misconduct is corrected.
COUNT II
Claims Against the Individual Defendants for
Violations of Section 20(a) of the Exchange Act
43.Plaintiff repeats all previous allegations as if set forth in full.
44.The Individual Defendants acted as controlling persons of SYNNEX within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their positions as officers and/or directors of SYNNEX, and participation in and/or awareness of the Company’s operations and/or intimate knowledge of the false statements contained in the Proxy Statement filed with the SEC, they had the power to influence and control and did influence and control, directly or indirectly, the decision-making of the Company, including the content and dissemination of the various statements which Plaintiff contends are false and misleading.
45.Each of the Individual Defendants was provided with or had unlimited access to copies of the Proxy Statement and other statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had the ability to prevent the issuance of the statements or cause the statements to be corrected.
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46.In particular, each of the Individual Defendants had direct and supervisory involvement in the day-to-day operations of the Company, and, therefore, is presumed to have had the power to control or influence the particular transactions giving rise to the securities violations as alleged herein, and exercised the same. The Proxy Statement at issue contains the unanimous recommendation of each of the Individual Defendants to approve the Proposed Transaction. They were, thus, directly involved in the making of the Proxy Statement.
47.In addition, as the Proxy Statement sets forth at length, and as described herein, the Individual Defendants were each involved in negotiating, reviewing, and approving the Proposed Transaction. The Proxy Statement purports to describe the various issues and information that they reviewed and considered—descriptions the Company directors had input into.
48.By virtue of the foregoing, the Individual Defendants have violated Section 20(a) of the Exchange Act.
49.As set forth above, the Individual Defendants had the ability to exercise control over and did control a person or persons who have each violated Section 14(a) and SEC Rule 14a-9, promulgated thereunder, by their acts and omissions as alleged herein. By virtue of their positions as controlling persons, these defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of defendants’ conduct, SYNNEX’s stockholders will be irreparably harmed.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff demands judgment and preliminary and permanent relief, including injunctive relief, in his favor on behalf of SYNNEX, and against defendants, as follows:
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Preliminarily and permanently enjoining defendants and all persons acting in concert with them from proceeding with, consummating, or closing the Proposed Transaction and any vote on the Proposed Transaction, unless and until defendants |
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disclose and disseminate the material information identified above to SYNNEX stockholders; |
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In the event defendants consummate the Proposed Transaction, rescinding it and setting it aside or awarding rescissory damages to Plaintiff; |
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Declaring that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act, as well as SEC Rule 14a-9 promulgated thereunder; |
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Awarding Plaintiff the costs of this action, including reasonable allowance for Plaintiff’s attorneys’ and experts’ fees; and |
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Granting such other and further relief as this Court may deem just and proper. |
JURY DEMAND
Plaintiff demands a trial by jury on all claims and issues so triable.
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Dated: June 22, 2021 |
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LONG LAW, LLC
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By |
/s/ Brian D. Long |
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Brian D. Long (#4347) 3828 Kennett Pike, Suite 208 Wilmington, DE 19807 Telephone: (302) 729-9100 Email: BDLong@longlawde.com
Attorneys for Plaintiff |
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