Logistics synergies is one of the reasons Performance Food Group Company has agreed to buy rival Reinhart Foodservice from Reyes Holdings in a deal estimated to be worth $2 billion.
Illinois-based Reinhart is the second largest privately held foodservice distributor in the U.S.
In addition to expanding its geographic reach and overall scale, Virginia-based Performance Food Group said in a release that the deal offers “significant synergy opportunities,” primarily in procurement, operations, and logistics, and noted that the deal will improve its network efficiency.
Food distributors have been dealing with increased costs such as higher pay for truck drivers and logistics workers in a tight labor market, as well as increased shipping, transport and fuel costs, notes the Wall Street Journal.
“One of the biggest advantages… is it will reduce the number of miles we drive,” said PFG CEO George Holm, according to the Journal, noting that he doesn’t plan to close any of Reinhart’s 26 distribution centers. Instead, he wants to use those facilities alongside PFG's own 80 or so centers to more efficiently serve customers across the country.
Performance said it would retain Reinhart’s drivers, warehouse workers and other employees.