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Sysco and US Foods Merging, Creates Nation’s Second Largest Private Fleet

December 9, 2013

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Two of the nation’s largest distributors of food to commercial kitchens are merging creating one of the nation’s largest private truck fleets.

Sysco and US Foods announced an agreement on Monday in an approximately $8.2 billion deal, with the combination having been approved by the board of directors of each company.

The new company will continue to be named Sysco and headquartered in Houston, Texas. At closing, Sysco will have estimated annual sales of approximately $65 billion.

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. As part of the transaction, 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.

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 and Kohlberg Kravis Roberts & Co., will join Sysco's board of directors upon closing.

The transaction, which is expected to close in the third quarter of calendar year 2014, is subject to customary closing conditions and regulatory approvals, including federal antitrust approval.

According to Transport Topics newspaper’s 2013 private fleet rankings, Sysco is the nation’s third largest private carrier operating nearly 8,000 tractors, just over 1,400 straight trucks and close to 10,000 trailers.

U.S. Foods is ranked fifth with more than 5,400 tractors, nearly 350 straight trucks and more than 8,400 trailers.

Based on these rankings, the combination would create the nation’s second largest private truck fleet with PepsiCo still being ranked number one.

 

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