The total transaction is valued at $1.8 billion, with the balance of the purchase price funded through US Food’s existing liquidity resources.
At close, US Foods’ pro forma net leverage is expected to be 4.1x. Given the combined company’s strong cash flow generation, including synergies, US Foods expects to reduce net leverage to approximately 3.0x by the end of fiscal 2020.
“This acquisition will significantly increase US Foods’ reach across key markets in the attractive and growing Northwest region of the U.S. and adds one of the most well-regarded regional distributors to our company,” commented US Foods Chairman and CEO Pietro Satriano. “SGA’s unique merchandising programs, mature local sourcing capabilities and track record of operational excellence will be strong additions to our business.”
US Food’s board of directors unanimously approved the acquisition. Closing is subject to regulatory approval and other customary conditions.
Centerview Partners acted as financial advisor, Cravath, Swaine & Moore as legal advisor, and KKR Capital Markets as debt capital markets advisor to US Foods. Morgan Stanley acted as financial advisor, and Davis Polk & Wardwell as legal advisor to Services Group of America.