Major United States foodservice distributor US Foods is becoming even larger with plans to acquire five smaller foodservice distributors.
US Foods received conditional approval from the U.S. Federal Trade Commission to acquire SGA’s Food Group of Companies for USD 1.8 billion (EUR 1.6 billion) in cash. SGA’s five operating companies are: Food Services of America, Systems Services of America, Amerifresh, Ameristar Meats, and GAMPAC Express.
US Foods expects to close the acquisition in the next few days.
“We are excited to finalize this transaction and enhance our overall scale and footprint in the attractive Northwest and West regions,” said US Foods Chairman and CEO Pietro Satriano, in a press release. SGA Food Group has unique center of plate, produce, and logistics capabilities, Satriano added.
As a condition to receiving regulatory clearance from the FTC, US Foods will divest three FSA distribution facilities located in Kent (Seattle), Washington; Meridian (Boise), Idaho; and Fargo, North Dakota. US Foods plans to retain a portion of the business currently serviced from the Kent facility.
US Foods is increasing the estimated annual run-rate for synergies from USD 55 million (EUR 50 million) to USD 65 million (EUR 59 million), despite the divestiture of three facilities, and expects to achieve the full run rate of synergies by the end of fiscal 2023. Estimated one-time costs of USD 45 million (EUR 41 million), inclusive of anticipated capital expenditures, are expected to achieve these synergies.
Before synergies, SGA Food Group is expected to contribute around USD 30 million (EUR 27 million) to US Foods’ adjusted EBITDA for the remainder of fiscal 2019 and approximately USD 105 million (EUR 95 million) on an annual run rate basis for fiscal 2019.
US Foods is increasing its adjusted diluted earnings per share range to USD 2.30 (EUR 2.09) to USD 2.40 (EUR 2.18) for full year fiscal 2019.
Photo courtesy of US Foods
