Project Description

Synnex Spin-off (Concentrix) Notes

November 25, 2020 – Update

  • Greenlight Capital bought Synnex recently.
    • Here’s what they wrote in their quarterly letter:

November 6, 2020 – Update

  •  On November 3, 2020, the Synnex board has approved the transaction and starting on December 1, 2020, Concentrix shares will begin trading under NASDAQ: CNXC.
  • Concentrix Spin-off Presentation.
  • Concentrix is a customer service experience company.
  • What is customer service experience?
    • Customer service experience is the overall experience of a customer based on interaction with a company’s sales, support and service teams during and after a purchase. More details here.
  • Example of a good customer service experience:
    • Someone calls the customer service number of a telecom operator for a specific issue with their current phone bill. Instead of asking the customer about the entire identity details, keeping them on hold for several minutes, the call operator quickly just validates the details with a single CRN number. And then, straightaway gets to offering a solution to their current problem, making the customer feel at ease.
    • The operator is instantly able to rectify and re-issue their bill. Additionally, he sends the customer a compensatory credit for their next bill-cycle as an apology for the inconvenience caused due to the mistake in the billing process. This is undoubtedly a good service experience.
  • Concentrix has been built over 15 years through multiple acquisitions.
  • Examples of what services that Concentrix provides:
    •  live and automated customer call centers
    • online chat support
    • outbound sales and marketing
    • billing, payments, and insurance claims management
  • Industry focus of Concentrix:
    • Healthcare
    • Technology
    • Banking
  • Potential comps (other business process outsourcing firms):
    • CNDT, WNS, EXLS, G, ACN, SYKE, TEP-FR, TTEC
  • Remainco:
    • Focused on technology distribution.
    • It is similar to Tech Data Corp which was recently purchased by private equity firm, Apollo.
    • SYNNEX’s tech distribution business distributes over 30,000 products from over 400 manufacturers ( like HP, Cisco, and Microsoft) to roughly 25,000 value-added resellers and retail customers.
    • Their product line includes IT peripherals, networking equipment, consumer electronics, software, security, data center solutions, and cloud services.
    • SYNNEX provides a highly-valuable role as the middleman in this industry, operating as a highly efficient, outsourced sales force for the OEMs, and providing end customers with bulk purchasing discounts, inventory, financing, and product advice.
  • Potential comps:
    • TECD, ARW, AVT, SCSC
  •  Articles:
  • Other things to note:
    • In March 2020, there was a cluster of insider buying around $75.
    • Recently, there has been clusters of insider selling.

January 9, 2020 – Update

  • On January 9, 2020, Synnex (SNX), announced that it would be spinning off Concentrix, a global consumer experience (CX) solutions company.
  • The spin-off generated $4.7BN in sales in 2019 and $531MM in operating profit. It generates revenue by offering services and solutions to help its clients manage and improve customer experiences. Services and products include welcome calls, billing, service inquiries, customer surveys, marketing solutions, and much more.
    • Competitors include Accenture, Conduent, and Genpact. While this business is higher margin than the remaining business, my initial impression is that it’s not a great business.
  • The remaining company will be a pure play technology distribution business. In 2019, it generated $19.1BN in revenue and $564MM in operating profit. While it makes sense to split these businesses up (as they have little overlap), this transaction doesn’t look too interesting at first blush. The spin-off is scheduled to be completed by the second half of 2020.