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Two distributors merge to become the largest

Synnex and Tech Data are merging.    Synnex and Tech Data will create the world’s largest IT distributor through their merger, coming in nearly $10 billion larger than Irvine, Calif.-based Ingram Micro, which had $47.2 billion in sales in 2019. The merger is expected to close in the second half of 2021, and generate $100 million of optimization and synergy benefits in the first year after closing and some $200 million by the end of the second year.

Why do we care?

I wonder a bit if we do.    In the world of IT services, we’ll be going from “the big four” distributors to the big three.     

In markets, we often debate the idea of market consolidation.   I’ve argued that for a market, it’s only really consolidation when a handful of companies make up the majority of the players.     For example, when talking about IT services companies, the M&A activity we see now for MSPs and even software vendors, isn’t consolidation because there are so many players.

However, with a small handful of distributors in the market, this IS my definition of consolidation.     Nothing is different today from yesterday tactically, so let’s not overblow the importance.     Distribution is a particularly hard space – and a more mature one.  Less players is likely not hugely impactful… but at least noteworthy.   

Source: CRN