Sysco to buy US Foods for $3.5 billion
Sysco has announced that it will acquire competing food distributor US Foods for about $3.5 billion in cash and stock, reports the Associated Press. Under the terms of the agreement announced Monday, Houston’s Sysco will pay $3 billion in common stock and $500 million in cash. It will also assume or refinance about $4.7 billion in debt.
Bill DeLaney, Sysco president and chief executive officer, will lead the combined company, which will continue to be named Sysco and headquartered in Houston, Texas. At closing, Sysco will have estimated annual sales of approximately $65 billion, the company announced in a statement.
Sysco said it expects the acquisition, which is likely to close in the third calendar quarter of 2014, to immediately boost its profit after adjusting for deal related costs and expenses. It’s also expected to result in annual cost savings of at least $600 million after three or four years.
DeLaney said, "As we continue on our transformational journey at Sysco, this transaction will position us to significantly accelerate our progress in achieving the vision we have for our company: to be our customers' most valued and trusted business partner. Sysco and US Foods have highly complementary core strengths including a broad product portfolio and passionate food people deeply committed to customer service, quality-assured products and safety. In particular we look forward to welcoming US Foods' talented employees and continuing to invest in the development of all of our people. Together we will strive to enhance shareholder value by providing our customers with highly differentiated products and services."
John Lederer, president and chief executive officer of US Foods, said, "Combining and maximizing the significant strengths of two outstanding companies is certain to be of tremendous advantage in supporting our customers as they tackle the challenges of today's demanding environment."
Source: AP, Sysco