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Sysco to merge with US Foods

Dec. 9, 2013 at 2:12 a.m.

Sysco and US Foods on Monday announced they will merge, in a deal that will see Sysco's annual sales grow from about $44.4 billion to $65 billion.

Sysco is one of Longview's largest employers, with about 216 employees working out of a food distribution center just south of town, according to information on the Longview Economic Development Corp.'s website.

The combined company will continue as Sysco. It will be headquartered in Houston with Sysco President and Chief Executive Officer Bill DeLaney leading the firm. The total value of the sale is about $8.2 billion. The companies reported that includes Sysco paying about $3.5 billion for US Foods equity - $3 billion in Sysco stock and $500 million in cash. Sysco also will assume or refinance US Foods' net debt of about $4.7 billion.

"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," Bill DeLaney, Sysco president and chief executive officer, said in a prepared statement. "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."

The deal is expected to close in the third quarter of calendar year 2014. Then, the equity holders of US Foods will own about 87 million shares, or roughly 13 percent of Sysco. A representative of each of US Foods' majority shareholders, affiliates of Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts & Co. L.P., will join Sysco's Board of Directors upon closing.

"Combining and maximizing the significant strengths of two outstanding companies is certain to be of tremendous advantage in supporting our customers as they tackle the challenges of today's demanding environment," John Lederer, president and chief executive officer of US Foods, said in a prepared statement.



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