Key insights
- Sysco's acquisition of Jetro Restaurant Depot for $29 billion, funded largely by debt, has led to a slight dip in Sysco's premarket trading. The deal expands Sysco's reach into the independent restaurant market but also involves pausing share repurchases. The increased debt burden and equity dilution are weighing on investor sentiment in the short term.
March 30 (Reuters) - Sysco will buy catering supplier Jetro Restaurant Depot in a $29 billion deal, including debt, the companies said on Monday, a move that would deepen the U.S. food distributor's reach into the price‑sensitive independent restaurant market.
Shares of Sysco, which has a market capitalization of $39.2 billion, were down about 2% in premarket trading after the company also said it would fund the deal through $21 billion of new and hybrid debt, along with $1 billion of cash and equity on hand.
Family-owned Restaurant Depot is a wholesale cash-and-carry supplier, selling directly to business owners. The deal would help complement Sysco's existing large-scale delivery business that serves restaurants, hospitals, and hotels.
Restaurant Depot shareholders would receive $21.6 billion in cash and 91.5 million Sysco shares, according to the terms of the deal. They will own 16% of Sysco upon the closing of the deal, the companies said.
Sysco is also pausing its share repurchase program and reaffirmed its annual forecasts.
Known for its steaks, fillets, and frozen-food products, which it supplies to fast-food chains such as KFC and Subway, Sysco had lifted its annual profit forecast earlier in the year, enjoying resilient demand even amid macroeconomic pressures.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Devika Syamnath)