HOUSTON (AP) — One of the largest food supply companies is buying one of its key rivals, creating an even larger, global distribution company.
Sysco is buying privately held US Foods for about $3.5 billion in cash and stock. When the deal closes, Sysco expects the addition of US Foods to boost its annual sales by about 46 percent to around $65 billion.
Sysco shares rose almost 10 percent Monday and hit their highest point in decades.
Houston's Sysco will pay $3 billion in common stock and $500 million in cash. It will also assume or refinance about $4.7 billion in debt. That puts the total value of the deal at about $8.2 billion.
Sysco President and CEO Bill DeLaney said that the two companies have highly complementary core strengths including large product portfolios.
For the fiscal year that ended in June, Sysco's sales totaled $44.41 billion. It trucks food and cooking supplies to about 425,000 customers through 193 locations in the U.S., Bahamas, Canada, Ireland and Northern Ireland.
US Foods' customers include independent and chain restaurants, health care and hospitality companies, and government and educational institutions. Major stakeholders in the company, based just outside of Chicago, in Rosemont, Ill., include Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts & Co. LP.