Sysco to buy rival US Foods Inc and become largest American distributor

http://www.theguardian.com/business/2013/dec/09/sysco-buys-us-foods-rival-distributor

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Sysco Corp has said it will buy rival US Foods Inc for about $3.5bn and assume about $4.7bn in debt to cement its position as the biggest US food distributor. 

Sysco shares jumped $7.79, or 23%, to $41.15 after the announcement. 

Shareholders of US Foods, owned by affiliates of private equity firms Clayton, Dubilier & Rice and KKR & Co, will own about 13% of Sysco after the closing of the deal, which will create a company with revenue of $65bn. 

"Combining and maximizing the significant strengths of two outstanding companies is certain to be of tremendous advantage in supporting our customers," US Foods Chief Executive John Lederer said in a statement on Monday. 

Sysco and US Foods distribute foods to restaurants, hotels, hospitals, schools and other institutions. <br />Clayton, Dubilier & Rice and KKR acquired the former US Food service from Dutch grocer Ahold for $7.1bn in 2007. Sysco said the deal is expected to add to earnings immediately after closing, expected in the third quarter of 2014. 

Goldman Sachs & Co is financial adviser to Sysco, while Wachtell, Lipton, Rosen & Katz and Arnall, Golden & Gregory LLP are legal advisers. Simpson Thacher & Bartlett LLP and Debevoise & Plimpton LLP are legal advisers to US Foods. 

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