Sysco to Buy US Foods for $3.5 Billion to Expand Food Services

Sysco Corp. (NYSE: SYY) agreed to buy privately held US Foods for $3.5 billion to further expand its food services. The shares jumped.
     Sysco will pay $3 billion in common stock and $500 million in cash. The company, which will also assume about $4.7 billion US Foods’ debt, said it has secured fully committed bridge financing for the transaction.
     The combined business, with about $65 billion in annual sales, will be lead by Sysco chief executive officer Bill DeLaney.
     Sysco rose 22 percent to $41.71 at 8:22 a.m. before the markets opened in New York.
     US Foods’ equity holders will own about 13 percent of Sysco. A representative of each of US Foods’ majority shareholders, affiliates of Clayton Dubilier & Rice LLC and Kohlberg Kravis Roberts & Co., will join the board upon closing.