SYSCO Corporation to Acquire US Foods for $3.5B (SYY)

SYSCO Corporation to Acquire US Foods for $3.5B (SYY)


Shares of SYSCO Corporation (SYY) were up over 29% on Monday morning after the company announced that it has agreed to acquire US Foods.

Sysco will acquire US Foods for a total of $3.5 billion. The deal also include Sysco assuming or refinancing US Food’s net debt, which is approximately $4.7 billion. The total enterprise value of this deal will be $8.2 billion.

The deal will result in equity holders of US Foods owning 87 million shares, or 13%, of SYY. The acquisition is expected to close in the third quarter of 2014. The combined company will be run by SYY’s president and CEO Bill DeLaney.

DeLaney commented: “As we continue on our transformational journey at Sysco, this transaction will position us to significantly accelerate our progress in achieving the vision we have for our company: to be our customers’ most valued and trusted business partner. Sysco and US Foods have highly complementary core strengths including a broad product portfolio and passionate food people deeply committed to customer service, quality-assured products and safety. In particular we look forward to welcoming US Foods’ talented employees and continuing to invest in the development of all of our people. Together we will strive to enhance shareholder value by providing our customers with highly differentiated products and services.”

SYSCO shares were up $10.19, or 29.70%, during pre-market trading Monday. The stock is up 8% YTD.

The Bottom Line

Shares of SYSCO Corporation (SYY) have a 3.38% yield based on Friday’s closing price of $34.31.

SYSCO Corporation (SYY) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

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