- Sysco, the largest food distributor in the U.S., will buy competitor U.S Foods for $3.5 billion plus the assumption of $4.7 billion in debt. The deal will give Sysco a 25% share of the $235 billion industry. The next-largest distributor, Performance Food Group, will have just 5% of the market.
- The transaction values U.S. Foods based in the Chicago suburb of Rosemont, at slightly less than 10 times trailing 12-month EBITDA.
- The sale marks quite a payday for private equity investors Clayton, Dubilier & Rice and Kohlberg Kravis Roberts, which paid just $7.1 billion, including debt, when it bought U.S. Foods in 2007.
Few things are as pointless as looking for the logic in how the government works. So we'll resist the urge to try and figure out what regulators will make of this transaction. Suffice it to say the combined companies will control roughly 1/4 of the entire market, but will control nearly all of it in many areas of North America. We suspect that will prompt a long hard look from the feds—and could potentially force a divestment or two.