Sysco Acquires Restaurant Depot in $29.1B Deal
Sysco Corporation has announced its acquisition of Jetro Restaurant Depot in a deal valued at $29.1 billion, marking a significant expansion into the cash-and-carry sector. This acquisition will enhance Sysco’s position as the largest supplier of food and supplies to restaurants in the United States.
Details of the Acquisition
The deal includes both cash and stock components, where Restaurant Depot shareholders are set to receive $21.6 billion in cash along with 91.5 million shares of Sysco stock. This valuation corresponds to 14.6 times Restaurant Depot’s operating income, emphasizing the strategic nature of the acquisition.
About Restaurant Depot
- Operates 166 warehouse locations across 35 states
- Annual revenue of $16 billion
- EBITDA of $2.1 billion
- Serves approximately 725,000 independent restaurant operators annually
Benefits of the Merger
The merger is expected to create a robust multichannel foodservice platform. According to Sysco CEO Kevin Hourican, this acquisition will strengthen the company’s financial profile and provide added value, choice, and convenience to customers nationwide.
Sysco plans to leverage its existing infrastructure to open over 125 new Restaurant Depot locations in the coming years. The combined entity generated nearly $100 billion in revenue last year, complemented by $6.4 billion in adjusted EBITDA.
Projected Cost Synergies
Both companies anticipate approximately $250 million in annual cost synergies within the first three years post-acquisition. This amount represents about 12.5% of Restaurant Depot’s operating income and will focus on procurement and supply chain optimizations.
Funding the Acquisition
To finance the deal, Sysco plans to raise $21 billion in new debt while utilizing $1 billion in cash reserves. Once finalized, the shareholders of Restaurant Depot will hold around 16% of Sysco’s stock, further integrating the two companies.
Industry Impact
Stanley Fleishman, executive chairman of Jetro Restaurant Depot, highlighted that the acquisition acknowledges the strengths of their business model. He also noted that Sysco’s extensive logistics capabilities will significantly benefit the retailer’s market expansion efforts.
This acquisition positions Sysco not only to enhance its offerings but also to tap into a crucial customer base, particularly independent restaurants, thus reinforcing its leading market position in the foodservice industry.
