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    Sysco, US Foods Agree to Merge

    Deal creates a company with estimated annual sales around $65 billion.

    HOUSTON -- Sysco Corp. and US Foods are merging in a deal with a total enterprise value of approximately $8.2 billion. The transaction is expected to close in the third quarter of 2014.

    The agreement was approved by each company's board of directors. Bill DeLaney, Sysco president and CEO, will lead the new company, which will continue to be named Sysco and headquartered in Houston. At closing, the new Sysco will have estimated annual sales of approximately $65 billion.

    "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," DeLaney said. "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," he added.

    Sysco will pay approximately $3.5 billion for the equity of US Foods, comprised of $3 billion of Sysco common stock and $500 million in cash. As part of the transaction, Sysco will also assume or refinance US Foods' net debt, which is approximately $4.7 billion, bringing the total enterprise value to $8.2 billion. Sysco has secured fully committed bridge financing and expects to issue permanent financing prior to closing.

    After completion of the transaction, the equity holders of US Foods will own approximately 87 million shares, or roughly 13 percent, of Sysco. A representative of each of US Foods' majority shareholders -- affiliates of Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts & Co. LP -- will join Sysco's board upon closing.

    "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," said John Lederer, president and CEO of US Foods.

    Sysco will establish a team comprised of members of both companies to prepare for and oversee a comprehensive integration for employees, customers and suppliers.

    Houston-based Sysco sells, markets and distributes food products to restaurants, health care and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. The company operates 193 distribution facilities serving approximately 425,000 customers. For fiscal year 2013 that ended June 29, the company generated record sales of more than $44 billion.

    Rosemont, Ill.-based US Foods serves independent and multi-unit restaurants, health care and hospitality entities, government and educational institutions. With approximately $22 billion in annual revenue, the company offers more than 350,000 products, including exclusive brands such as Chef's Line and Rykoff Sexton. The company employs approximately 25,000 people in more than 60 locations nationwide.

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