NOTE 3 - ACQUISITIONS

Acquisition of TS

On September 19, 2016, Tech Data entered into an interest purchase agreement, as subsequently amended, with Avnet to acquire all the shares of TS. Pursuant to the interest purchase agreement, and subject to the terms and conditions contained therein, at the closing of the acquisition on February 27, 2017, Tech Data acquired all of the outstanding shares of TS for an aggregate estimated purchase price of approximately $2.7 billion, including approximately $2.5 billion paid to Avnet in cash including estimated closing adjustments, and 2,785,402 shares of the Company's common stock, valued at approximately $247 million based on the closing price of the Company's common stock on February 27, 2017. The final cash consideration is subject to certain working capital and other adjustments and therefore the final purchase price may vary significantly from these estimates. TS delivers technology services, software, hardware and solutions across the data center. The TS acquisition diversifies the Company's end-to-end solutions, deepens its value added capabilities and balances its solutions portfolio. The addition of TS also extends the Company's geographic reach into the Asia-Pacific region while broadening its capabilities in Europe and the Americas, including re-entering Latin America with a focus on the delivery of new technologies that drive and complement the data center in this market.

The Company has accounted for the TS acquisition as a business combination and allocated the preliminary estimated purchase price to the estimated fair values of assets acquired and liabilities assumed. The Company has not yet completed its evaluation and determination of certain assets acquired and liabilities assumed, primarily (i) the final valuation of intangible assets related to customer relationships and trade names, (ii) the final assessment and valuation of certain other assets acquired and liabilities assumed, including accounts receivable, inventory, property and equipment, capitalized software, accrued expenses and other liabilities and (iii) the final assessment and valuation of certain income tax amounts. Therefore, the final fair values of the assets acquired and liabilities assumed may vary significantly from the Company's preliminary estimates.

The preliminary allocation of the estimated purchase price to assets acquired and liabilities assumed is as follows:



(in millions)
Current assets	$	2,363
Property and equipment, net	61
Goodwill	493
Intangible assets	1,035
Other assets, net	180
Total assets	4,132

Other current liabilities	1,178
Revolving credit loans and long-term debt	119
Other long-term liabilities	118
Total liabilities	1,415

Estimated purchase price	$	2,717

The allocation of the preliminary value of identifiable intangible assets is comprised of approximately $991 million of customer relationships with a weighted-average amortization period of 14 years and $44 million of trade names with an amortization period of 5 years. Goodwill is the excess of the consideration transferred over the net assets recognized and primarily represents the expected revenue and cost synergies of the combined company and assembled workforce. Approximately $1.1 billion of the goodwill and identifiable intangible assets are expected to be deductible for tax purposes.

Included within the Company’s Consolidated Statement of Income are estimated net sales of approximately $1.6 billion from TS from the acquisition date of February 27, 2017 through the Company’s quarter ended April 30, 2017. As the Company began integrating certain sales and other functions after the closing of the acquisition, these amounts represent an estimate of the TS net sales for the two months ended April 30, 2017 and are not necessarily indicative of how the TS operations would have performed on a stand-alone basis.

The following table presents unaudited supplemental pro forma information as if the TS acquisition had occurred at the beginning of fiscal 2017. The pro forma results presented are based on combining the stand-alone operating results of the Company and TS for the periods prior to the acquisition date after giving effect to certain adjustments related to the transaction. The pro forma results exclude any benefits that may result from potential cost synergies of the combined company and certain non-recurring costs. As a result, the pro forma information below is presented for informational purposes only and does not purport to present what actual results would have been had the acquisition actually been consummated on the date indicated and it is not necessarily indicative of the results of operations that may result in the future.



Three months ended April 30:	2017		2016
(in millions)
Pro forma net sales	$	8,397	$	8,177
Pro forma net income	$	35	$	31

Adjustments reflected in the pro forma results include the following:


•	Amortization of acquired intangible assets based on the preliminary valuation and estimated purchase price


•	Interest costs associated with the transaction


•	Certain non-recurring transaction costs


•	Tax effects of adjustments based on an estimated statutory tax rate

Acquisition and integration expenses

Acquisition and integration expenses are comprised of transaction related costs, professional services, restructuring costs and other costs related to the acquisition of TS. Transaction related costs primarily include investment banking fees incurred in connection with the completion of the transaction. Professional services are primarily comprised of integration related activities, including professional fees for project management, accounting and tax consulting services. Restructuring costs are comprised of severance and facility exit costs.

Acquisition and integration expenses for the three months ended April 30, 2017 are comprised of the following:



Three months ended:	April 30, 2017
(in thousands)
Transaction related costs	$	15,179
Professional services	11,907
Restructuring costs	10,345
Other	4,635
Total	$	42,066

During the three months ended April 30, 2017, the Company recorded restructuring costs, primarily in the Americas segment, including severance costs related to headcount reductions and facility exit costs. The accrued restructuring charges are included in “accrued expenses and other liabilities” in the Consolidated Balance Sheet.

Information related to restructuring program activity during the three months ended April 30, 2017 is outlined below:



	Severance			Facility Exit Costs			Total
(in thousands)
Fiscal 2018 restructuring expenses	$	10,059		$	286		$	10,345
Cash payments	(4,127		)	(286		)	(4,413		)
Foreign currency translation	26			—			26
Balance at April 30, 2017	$	5,958		$	—		$	5,958