Move creates two publicly traded companies that separately address IT distribution and business services
The Lowdown: The split, finalized this week, has created two publicly traded companies – Synnex, a$19 billion distributor, and Concentrix, which generates about $4.7 billion in annual revenue. Synnex is listed on the New York Stock Exchange, with Concentrix on the NASDAQ.
The Details: Synnex officials in January announced the decision to break into two separate companies, a move that it had contemplated due to the distinct natures of the businesses. Concentrix operated as a wholly owned subsidiary of Synnex, which bought Concentrix in 2006. The impetus to spin off Concentrix came after Synnex bought business service vendor Convergys for $2.43 billion two years ago and integrated it into Concentrix.
Concentrix is positioning itself as a provider of customer experience (CX) solutions and services. The company, headquartered in Fremont, California, offers a range of services and solutions, from analytics and consulting, customer engagement, and finance and accounting to marketing, insurance, and technology and systems integration. Industries it touches include automotive, healthcare, technology, retail, and energy.
The Impact: The reasoning behind the decision to spin off Concentrix echoed similar arguments made by other companies, such as Hewlett-Packard in 2014, that shed large parts of their businesses. Given the distinct focus of each business, Synnex officials said breaking into two companies would enable each to concentrate more sharply on its respective roles and strategies.
It also will give the channel partners of each to take advantage of these clearer lines of distinction.
Background: After buying Concentrix 14 years ago, Synnex – also based in Fremont, California – acquired IBM’s business process outsourcing service unit for $505 million in 2013 and integrated it into Concentrix. Then came the Convergys acquisition. The result was a Concentrix business that now supports more than 95 Fortune 500 companies and more than 90 high-growth clients in more than 275 locations around the world.
Synnex initially had expected to complete the spin-off in the middle of the year. In March, however, the company announced it was putting the move on hold due to the disruption caused by the coronavirus outbreak, saying the company’s focus needed instead to be on customers and employees. The Synnex board of directors gave its OK for the move in November.
The Buzz: “We are pleased to announce the completion of the separation transaction and wish the Concentrix team well as an independent publicly traded company,” Synnex President and CEO Dennis Polk said. “I am excited for the future of Synnex and the ongoing value we expect to deliver to our vendors, customers, associates, and shareholders.”
“As a leading global provider of CX solutions and technology, we are truly excited to celebrate our listing day and start this next exciting chapter,” said Chris Caldwell, president and CEO of Concentrix. “Operating as an independent company will allow us to accelerate innovations and make additional investments that drive higher value for our clients, their customers, and our shareholders.”
“I am thrilled to work with such a groundbreaking organization at this pivotal moment in its history, and I can’t wait to see what the future holds as I work together with Chris and the rest of the board to drive growth and long-term value for clients, shareholders, and the industry,” said Kathryn Marinello, Concentrix’s chairperson of the board.