Sysco purchases rival US Foods for $3.5B to create food distribution giant

By VCPOST Staff Reporter

Dec 09, 2013 11:10 PM EST

Sysco Corp and US Foods, the two biggest food distribution firms in the country, announced a merger that will spawn a giant with about USD65 billion in annual revenue. Sysco said it will buy US Foods for USD3.5 billion, according to The Wall Street Journal.

According to Sysco Chief Executive Bill Delaney, the acquisition deal will provide more purchasing power, cost savings, and innovation ability for the company. Delaney admitted the firm might need to sell some parts of the business to comply with antitrust regulations. Right now, the company still has no divestiture plans yet, the report explained.

Houston-based Sysco and Illinois-based US Foods said their combination is expected to produce a synergy of at least USD600 million after three to four years, the report stated.

Under the terms of the acquisition deal, Sysco will pay about USD3 billion in stock and USD500 million in cash for US Foods. Sysco will also assume or refinance the USD4.7 billion debt of US Foods. The firms said they expect to close the transaction by next year's third quarter, The Wall Street Journal reported.

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