SYNNEX Corp (Concentrix) Spin-off Notes

– SNX confirmed on its Q3 2020 earnings call that the spin-off is on track to be completed by year end 2020. Management is targeting a December 1, 2020 spin-off date.

I also wanted to provide an update regarding the Concentrix spin. We remain on track for a calendar Q4 spin and believe the most natural date for the spin to be December 1. As is consistent with our year-end, and as a good clean start for 2020, for both Concentrix and SYNNEX.

As we see it today, the estimated SYNNEX Corp gross debt will be approximately $2.6 billion with Concentrix receiving approximately $1.1 billion and SYNNEX receiving approximately $1.5 billion. The majority of cash on hand, which we estimate will be approximately $700 million at spin will be held by SYNNEX. The use of cash in Q4 will be for normal seasonal uses and debt pay down.

As we have previously discussed, we want both companies to be well positioned amongst its peers from a leverage and liquidity standpoint. These debt balances are estimates and could change based on Q4 performance. We are well down the path with our bankers in securing third party financing for Concentrix, and are confident in the capital structure of both businesses. SYNNEX and Concentrix will have the appropriate dry powder to support growth and M&A opportunities.

– Here is a good VIC write -up that reviews the bull case.

– Good article on how COVID digital transformation is impacting Concentrix.