Tomahawk, WI 12/11/2013 (BasicsMedia) – SYSCO Corporation (NYSE:SYY) made an announcement on December 9, Monday, that it has agreed to acquire US Foods, one of its key rivals.

Deal

The company has agreed to acquire US Foods for about $3.5 billion.  However, the total value of deal is $8.2 billion where approximately $4.7 billion will be refinanced by the company for the debt of US Foods. The company has agreed to pay $3.5 billion in cash and stock, where $3 billion will be paid in common stock while $500 million will be paid in cash. After the completion of deal, the shareholders of US Foods will own approximately 87 million shares or about 13% of the common stock of SYSCO Corporation (NYSE:SYY).

Company’s Growth

The acquisition is expected to boost the annual sales of the company to about $65 billion, which is by more than 45%. This result is expected because of the fact that large product portfolio of US Foods will best complement with the core strengths of SYSCO Corporation (NYSE:SYY). These two companies will merge to give best quality services to their customers. The company is working on reducing the costs; however, it must be careful, as these spiralling costs can have negative impacts on profit margins of the company.

Management

Bill DeLaney, the president and Chief Executive Officer of the company, will run SYSCO Corporation (NYSE:SYY). There are some more developments within the company that need to be noted. The Executive Chairman of the Board of Directors, Manuel (Manny) Fernandez, stepped down at the Annual shareholders gathering of the company. Jackie M. Ward took over as the Non-Executive Chairperson on the Board of Directors.

Business Strengths

The major stakeholders of US Foods include Kohlberg Kravis Roberts & Co, Dubilier & Rice LLC and Clayton. The company also extends its help to serve many educational and government institutions and chain restaurants. SYSCO Corporation (NYSE:SYY) also reaches out to more than 425,000 customers with cooking and food supplies.  Therefore, these companies together, can do wonders.

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