Sysco Set to Acquire US Foods in $8.2 Billion Transaction

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Researched by Industrial Info Resources--Sysco Corporation (NYSE:SYY) (Houston, Texas) is solidifying its position as North America's largest food distribution company with the acquisition of US Foods (Rosemont, Illinois). Sysco will pay $3 billion in stock and $500 million in cash, including the assumption of US Foods' debt, which is currently $4.7 billion. The total enterprise value of the transaction is valued at $8.2 billion. The board of directors of each company approved the transaction.

Industrial Info is tracking more than $200 million in capital expenditures by Sysco to build new and expand existing facilities. Similarly, current planned activity for US Foods stands at just more than $150 million. Project expenditures by both companies include plans to build greenfield facilities and more than 20 large building expansions across the U.S. and Canada.

Sysco expects its annual revenue to grow 46%, with the combined companies expecting to have annualized sales of approximately $65 billion and operating cash flows of approximately $2 billion. US Foods reported sales of $21.7 billion in revenue last year. Additionally, the transaction is expected to generate significant strategic benefits and cost synergies, achieving annual synergies of at least $600 million after three to four years, primarily stemming from supply chain efficiencies, merchandising activities, and overlapping general and administrative functions.

The transaction is expected to be immediately accretive to earnings, after adjusting for transaction-related costs and amortization of intangibles.

Industrial Info's database of active capital and maintenance expenditures in the Food and Beverage Industry across North America, and the Sugar Processing Industry and Water Desalination Segment worldwide, has current expenditures of $61 billion and more than 3,000 active projects. The North American portion comes out to more than 1,600 active projects that total more than $26.7 billion.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.