Berkshire Is Thwarted in Its Bid for Tech Data
November 29 2019 - 2:09PM
Dow Jones News
By Nicole Friedman
Berkshire Hathaway Inc. offered about $5 billion for technology
distributor Tech Data Corp. last week, but it was outbid by Apollo
Global Management, said Warren Buffett, Berkshire's chairman and
chief executive.
The rare insight into a Berkshire deal that fell through
illuminates the challenges facing the Omaha, Neb., conglomerate as
it looks to spend its growing cash pile. Berkshire had a record
$128 billion in cash as of Sept. 30, and Mr. Buffett is eager to
spend it on acquisitions and large investments. But he is unwilling
to pay prices that he sees as unreasonably high, and the
competition from private-equity firms and other large investors is
fierce.
Tech Data late Wednesday said it has agreed to be acquired by
Apollo for $145 a share in cash, or slightly more than $5 billion
not including debt, a $15-a-share increase from Apollo's offer
earlier in November.
After Apollo made its earlier offer for Tech Data, Bank of
America approached Berkshire portfolio manager Todd Combs last week
about buying the company, Mr. Buffett said in an interview. Mr.
Combs is one of two portfolio managers at Berkshire and a key
lieutenant for helping Mr. Buffett make investments and vet
potential deals.
Mr. Buffett said he read the company's financial statements and
investor presentations and was immediately interested.
"It was our kind of business. It's one you can understand," Mr.
Buffett said. "I may not understand all of the products that they
sell and I may not understand what the customers who buy the
products do with them, but I do understand the middleman's
role."
Greg Abel, Berkshire's vice chairman for noninsurance business
operations and another of Mr. Buffett's top lieutenants, visited
Tech Data's headquarters in Clearwater, Fla., last Friday.
Berkshire then made an offer to buy the company at $140 a
share.
Tech Data's board of directors approved the deal, Mr. Buffett
said, but Apollo raised its offer this week. Berkshire famously
doesn't participate in bidding wars, and it declined to raise its
price.
Berkshire's role in the bidding was reported earlier by
CNBC.
Tech Data shares recently traded 12% higher at $144.89.
Representatives for Tech Data and Apollo declined to
comment.
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
November 29, 2019 13:54 ET (18:54 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Tech Data (NASDAQ:TECD)
Historical Stock Chart
From Aug 2024 to Sep 2024
Tech Data (NASDAQ:TECD)
Historical Stock Chart
From Sep 2023 to Sep 2024