What changed in this filing

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Item 1A. Risk Factors

2021-10-05 compared with 2021-07-07 · 36 added, 62 removed, 64 unchanged (60% of the section changed)

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Except as set forth below, there have been no material changes from the risk factors disclosed in our 2020 Annual Report on Form 10-K.

Risks Related to the Proposed Acquisition of Tech Data

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 proposed acquisition of Tech Data (the “Merger”) will depend, in part, on our ability to realize the anticipated benefits from combining the businesses of SYNNEX and Tech Data.

Risks Related to the Acquisition of Tech Data

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 acquisition of Tech Data (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:

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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.

SYNNEX and Tech Data have operated 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-completion integration process that takes longer than originally anticipated.

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

attracting, motivating and retaining executives and other key personnel until the Merger is completed;

attracting, motivating and retaining executives and other key personnel;

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

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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 company’s 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.

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 Hart-Scott-Rodino Antitrust Improvements Act of 1976 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 aren’t obtained, the Merger will not be completed.

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 the proxy statement filed on June 9, 2021 (“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 the 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.

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, 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 associates;

We may be required to pay Tech Data a fee of up to $131.7 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;

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.

We may be targets of securities class action and derivative lawsuits relating to the Merger, which could result in substantial costs and may delay or prevent the Merger from being completed.

In addition, at times, the attention of certain members of either or both company’s management and resources may be focused on 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.

If we fail to properly mitigate these risks or address the issues set forth above, 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, which in turn could adversely affect our business operations and value of our common stock.

We may be targets of securities class action and derivative lawsuits relating to the Merger, which could result in substantial costs.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements.

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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.

Currently, we are not aware of any securities class action lawsuits or derivative lawsuits being filed in connection with the Merger.

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 relating to the Merger have been filed against us, which could result in substantial costs.

Stockholder lawsuits are often brought against companies that have entered into merger agreements.

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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 May 31, 2021, we had $1.6 billion of total debt.

We expe ct 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 need s 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 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 of Tech Data , 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.

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

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.

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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.

We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred related to 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.

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

As a result of the issuance of 44 million shares of SYNNEX common stock in the Merger, entities affiliated with Apollo Global Management, Inc.

(“Apollo”) held 46% of the Company’s stock immediately following the closing of the Merger.

Additionally, the Company entered into an Investor Rights Agreement at the closing of the Merger, which provides that following the closing, the board of directors shall be comprised of eleven directors, and that affiliates of Apollo have the right to nominate a certain number of directors, depending on the percentage of the outstanding shares of SYNNEX common stock held.

As a result, Apollo will be in a position to influence (subject to organizational documents and Delaware law) the composition of the Company’s board of directors 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 Related to the Discontinuance of LIBOR

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Agreement and Plan of Merger, dated as of March 22, 2021, by and among SYNNEX, Spire Sub I, Inc., Spire Sub II, LLC, and Tiger Parent (AP) Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 22, 2021).

Restated Certificate of Incorporation (incorporated by reference to Exhibit 3(i).3 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 (File No.

333-108543)).

Amended and Restated Bylaws (incorporated by reference to Exhibit 3(ii).1 to the Company’s Current Report on Form 8-K filed on April 2, 2008).

First Amendment to the Amended and Restated Bylaws (incorporated by reference to Exhibit 3(ii).1 to the Company’s Current Report on Form 8-K filed on March 22, 2021).

Bridge Commitment Letter dated as of March 22, 2021, by and among SYNNEX and Citigroup Global Markets Inc.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 22, 2021).

Amendment No.

2 to SYNNEX Corporation 2020 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on April 8, 2021).

Credit Agreement dated as of April 16, 2021 among SYNNEX Corporation and named Initial Lenders and Citibank, N.A.

as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 20, 2021).

Restated Certificate of Incorporation (incorporated by reference to Exhibit 3(i).1 to the Company’s Current Report on Form 8-K filed on September 2, 2021).

Amended and Restated Bylaws (incorporated by reference to Exhibit 3(ii).1 to the Company’s Current Report on Form 8-K filed on September 2, 2021).

Indenture, dated as of August 9, 2021, by and between SYNNEX Corporation and Citibank, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

First Supplemental Indenture, dated as of August 9, 2021, between SYNNEX Corporation and Citibank, N.A., as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Second Supplemental Indenture, dated as of August 9, 2021, between SYNNEX Corporation and Citibank, N.A., as trustee (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Third Supplemental Indenture, dated as of August 9, 2021, between SYNNEX Corporation and Citibank, N.A., as trustee (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Fourth Supplemental Indenture, dated as of August 9, 2021, between SYNNEX Corporation and Citibank, N.A., as trustee (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Form of $700,000,000 1.250% Senior Notes due 2024 (included as Exhibit A to Exhibit 4.2) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Form of $700,000,000 1.750% Senior Notes due 2026 (included as Exhibit A to Exhibit 4.3) (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Form of $600,000,000 2.375% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.4) (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Form of $500,000,000 2.650% Senior Notes due 2031 (included as Exhibit A to Exhibit 4.5) (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Registration Rights Agreement, dated as of August 9, 2021, by and between SYNNEX Corporation and Citigroup Global Markets Inc., as representative of the initial purchasers of the Notes (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 9, 2021).

Investor Rights Agreement dated September 1, 2021 between SYNNEX and Tiger Parent Holdings, L.P.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 2, 2021).

Offer Letter with Richard Hume dated August 31, 2021 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 2, 2021).

Amendment to Offer Letter dated September 28, 2021, by and between TD SYNNEX and Dennis Polk (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 28, 2021).

Advisor Agreement with Dwight Steffensen dated August 31, 2021.

Rule 13a-14(a) Certification of Chief Executive Officer.

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Section 1350).

Voting Agreement, dated as of March 22, 2021, by and among SYNNEX, Tiger Parent (AP) Corporation, and certain stockholders of SYNNEX (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on March 22, 2021).

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are 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, thereunto duly authorized.

October 5, 2021

SYNNEX CORPORATION

/s/ Dennis Polk

/s/ Richard T.

President and Chief Executive Officer

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors