Warren Buffett, the owner of the giant company Berkshire Hathaway, was defeated in the bidding of acquiring an IT-based company, Tech Data. Apollo Global Management, a private equity firm, agreed to acquire the Tech Data for $ 5.14 billion, excluding debt, by beating the bid of Warren Buffett.
Changes in the Deal
According to the deal, Apollo Global Management each share of Tech Data was worth $ 145. The company’s earlier bid was $ 130 per share, amounting to $ 4.77 billion.
The change in the share price of the Tech Data was due to do to a bid of $140 by Warren, which raised the company’s value to surpass $ 5 billion, excluding debt. Since Apollo’s latest offer was better than Buffett’s, the tech company entered the deal with Apollo.
Tech Data, an American multinational company, is a leading distributor of technology products and services. Its services allow companies such as HP, Apple, Cisco, and Microsoft to bring their products to the market by offering technical and business support services.
The company made a revenue of $ 37 billion in 2018, in which around 16% was from Apple products and 11% each from Cisco and Hewlett Packard Enterprise. The company was valued to $ 4.5 billion; however, its value increased post the bidding.
Under the deal, Apollo and Tech Data extended their ‘go-shop’ provision until December 9, 2019, to consider a higher offer before the set date.
Buffett started participating in the bid on November 20, 2019, a few days after the Bank of America’s participated in the bid. The tech company had approved of Buffett’s offer until Apollo’s placed a new bid worth $ 145 a share on Wednesday.
Losing the bid, Buffett, who owns Berkshire Hathaway which is currently worth around $ 128 billion, commented that he could not raise his bid any higher.
He further explained, “In recent years the premium for buying companies outright has gotten too rich, because there is so much liquidity in the markets, and competition from private-equity companies and other players has pushed prices to extremes”.
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