Close

Welcome back to Stockhouse
Member Sign In

Email or Username:
Password:
Close

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.

Enter your email address:
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

Sysco (SYY) taking over private distributor giant US Foods for $3.5 billion

Canadian Press, The Canadian Press
0 Comments| December 9, 2013


HOUSTON - Sysco (NYSE:SYY, Stock Forum) is buying the food distributor US Foods, the tenth largest private company in the United States, for approximately $3.5 billion in cash and stock.
 
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.
 
That puts the total value of the deal at about $8.2 billion. When the acquisition closes, Sysco will have annual sales of about $65 billion.
 
Sysco President and CEO Bill DeLaney said that the two companies have highly complementary core strengths including large product portfolios.
 
The buyout has been approved by the boards of both companies.
 
When the deal closes, US Foods shareholders will own about 87 million shares, or about 13 per cent, of Sysco's common stock. Representatives of majority shareholders at US Foods, based just outside of Chicago in Rosemont, Ill., will join Sysco's board.
 
Sysco said it expects the acquisition, which is expected 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.
 
Shares of Sysco Corp. jumped 30 per cent in premarket trading to $44.35. That would be an all-time high if it holds when the market opens.

Tags: FOOD DISTRIBUTION CONSUMER DEFENSIVE

Rate this article
0 stars
v
Usefulness

Clarity

Credibility

Comments

No comments yet. Be first to comment!

Leave a Message

You must be logged in to access this feature.