Food Business News - December 17, 2013 - (Page 10)

Sysco to acquire US Foods in $8.2 billion deal HOUSTON - Sysco Corp. S C will acquire US Foods, Rosemont, Ill., in a transaction valued at $8.2 billion. The structure of the transaction requires Sysco to pay approximately $3.5 billion for the equity of US Foods, comprising $3 billion of Sysco common stock and $500 million of cash. As part of the transaction, Sysco also will assume or refinance US Foods' net debt, which is currently approximately $4.7 billion, bringing the total value f the transaction t $8 2 bil ti to $8.2 bilof th t lion. After completion of the transaction, the shareholders of US Foods will own approximately 87 million shares, or roughly 13% of Sysco. A representative of each of US Foods' majority shareholders, affiliates of Clayton, Dubilier & Rice L.L.C. and Kohlberg Kravis Roberts & Co. L.P., will join Sysco's board of directors upon closing. "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," said Bill DeLaney, president and chief executive officer of Sysco. "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." At closing, the combined companies are expected to have annualized sales of approximately $65 billion and generate operating cash flows of approximately $2 billion, according to Sysco. In a conference call to discuss the proposed acquisition, Mr. DeLaney outlined why the transaction makes sense. "In this industry, we distribute locally and compete street by street," he said. "This combination gives us the opportunity to, one, take meaningful cost out of the system while improving the customer experience, which includes lowering product and distribution cost. Two, integrate higher-margin products. Three, develop more effective and efficient enterprise structure, supported by the best possible technology." Mr. DeLaney added that as the deal moves forward the company may initiate some divestitures. "The only things we can model are the two businesses as they stand today," he said. "Now, we wouldn't be going forward if we didn't think that we're going to have a successful outcome here. But at the same time, we expect as we've signaled that there will be a review process. It will take several months. We'll have some good discussions along those lines. "So, there could very well be some divestitures. Our point, I think, is that we've modeled what we can today and even with some divestitures, we still see this as a very attractive deal." FBN Pepsi ousts Coca-Cola at Buffalo Wild Wings MINNEAPOLIS - Buffalo Wild Wings has closed its tab with the Coca-Cola Co. PepsiCo, Inc. has become the soft drink provider at the sports bar and grill. Beginning in early 2014, the 10 FOODBUSINESS NEWS SINESS ® chain will serve Pepsi noncarbonated beverages in its more than 975 locations in the United States. The roll-out is expected to be completed system-wide by the spring. Financial terms of the agreem ment were not disclosed. "What attracted us to PepsiCo is their extensive beverage an food portfolio," said Sally and Sm Smith, chief executive officer of Buffalo Wild Wings. "We se this as a very powerful see pa partnership in several ways. Fo starters, we'll be bringFor in dynamic beverage brands ing to our restaurants, including op options that our guests have be asking for, like Mountain been D Dew. We were also drawn to th marketing and promothe tio tional strength a partnership with PepsiCo creates, as it aligns well with our guests. Their NFL sponsorship and relationships with additional sports, entertainment and pop culture icons will enhance our guest experience in the future." The agreement includes Tropicana juices and lemonades and Lipton teas. Additionally, such PepsiCo snack brands as Doritos, Fritos, Tostitos and Ruffles may appear on the restaurant menu. "This partnership between PepsiCo and Buffalo Wild Wings is a natural fit," said Indra Nooyi, chairman and chief executive officer of PepsiCo. "We see tremendous opportunities to leverage PepsiCo's diverse food and beverage portfolio in ways that benefit both companies through exciting new innovations, unique consumer engagement programs, and powerful brand activations tied to sports and entertainment. We greatly appreciate the opportunity to partner with Buffalo Wild Wings, an impressive and growing company that has a bright future ahead." PepsiCo has had some success with such partnerships. The company's effort with Yum! Brand Inc.'s Taco Bell business has included introduction of the Doritos Locos Tacos, the biggest new product launch in Taco Bell history, said Greg Creed, Taco Bell's chief executive officer. FBN December 17, 2013

Table of Contents for the Digital Edition of Food Business News - December 17, 2013

Food Business News - December 17, 2013
Post acquisition binge continues
WhiteWave Foods to acquire Earthbound Farm
New U.S.D.A. action plan targets Salmonella
Table of Contents
Web Contents
Editorial - Potential exists for a great 2014
Sysco to acquire US Foods in $8.2 billion deal
Pepsi ousts Coca-Cola at Buffalo Wild Wings
Kroger sees greater opportunity in ‘natural’ portfolio
Diamond Foods continues to struggle
C.D.C. taking food safety surveillance to food service
Use of antibiotics in meat animal production may be ending
Pizza: The next big thing in fast-casual?
On-line sales looming for food
Bob Evans Farm on the brink?
Post acquisition binge continues
Breaking in to breakfast
Global trends to watch in 2014
Yogurt makers pump up protein claims
Market Insight - Corn sweetener prices will be lower in 2014
Ingredient Innovations - Mimicking mother’s milk
Sodium reduction: A little goes a long way
Beverage Business News - Wellness beverages
New Food Products
Ingredient Market Trends - Nature’s bounty, nature’s wrath
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - December 17, 2013