Sysco To Buy US Foods For $3.5 Billion

HOUSTON and ROSEMONT, Ill.Sysco Corp. announced plans to acquire US Foods for $3.5 billion from a private equity firm, effectively combining the top two U.S. foodservice companies into one of the nations largest foodservice suppliers. The transaction, which has been approved by each companies board of directors, will represent a total enterprise value of approximately $8.2 billion.

Under terms of the agreement, Sysco will pay approximately $3.5 billion for the equity of US Foods, comprising $3 billion of Sysco common stock and $500 million of cash. Sysco will also assume or refinance US Foods' net debt, which is currently approximately $4.7 billion, bringing the total enterprise value to $8.2 billion.

Bill DeLaney, Sysco president and chief executive officer, will lead the combined company, which will continue to be named Sysco and headquartered in Houston. At closing, Sysco will have estimated annual sales of approximately $65 billion.

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

Commenting on the deal, Syscos 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 CEO 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."