Buyout firm Apollo Global in $5 billion bid for Tech Data

Private equity firm Apollo Global Management LLC has approached Tech Data Corp with an offer to acquire the US information technology equipment distributor for close to $5 billion, people familiar with the matter said on Tuesday.

Apollo's move comes as Tech Data's shares are already hovering at all-time highs, amid investor optimism that demand from small and medium-sized businesses for its offerings will remain strong despite concerns about the US economy cooling.

Apollo has offered to pay about $130 per share in cash for Tech Data, one of the sources said. Tech Data shares ended trading on Tuesday at $111.34.

There is no certainty that Tech Data will engage in negotiations or that any deal will occur, the sources added, asking not to be identified because the matter is confidential. Apollo declined to comment, while Tech Data did not respond to a request for comment.

Based in Clearwater, Florida, Tech Data provides computers, mobile phones, printers, servers and other information technology infrastructure to corporate resellers, direct marketers and retailers. It has a market capitalization of $4 billion, and debt and cash on hand as of the end of July of $1.3 billion and $738 million, respectively.

Tech Data has lower operating margins than some of its peers, as it invests in expanding its offerings. Two years ago, it acquired Avnet Inc's technology solutions business for $2.6 billion.

The technology equipment distribution sector has attracted strong private equity interest in the last year. In January, buyout firm CVC Capital Partners acquired ConvergeOne Holdings Inc, a distributor of networking and collaboration products, for $1.8 billion.

Apollo has also shown interest in the sector, making an unsuccessful bid last year to acquire US electronics distributor Ingram Micro Inc from HNA Group Co for up to $7.5 billion.