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Monday, December 9, 2013

Sysco to purchase US Foods from private equity, shares leap, (NYSE: SYY)

Sysco Corp will purchase US Foods Inc for about $3.5 billion from its private equity owners in a deal that will combine the top two U.S. food distributors and create a company commanding at least a quarter of the $235 billion North American market.Sysco, whose shares jumped as much as 25 percent to a record high on Monday, touted the combination of its supply chain expertise with the strong consumer-facing technologies of US Foods as a key driver for the deal, which creates a company with revenue of $65 billion."The purchase price seems fairly reasonable. It is less than 10 times trailing 12-month EBITDA, and there are synergies that are expected to result from the deal," said Morningstar analyst Erin Lash told Reuters.United Natural Foods Inc, the next largest publicly listed food distributor, trades at about 14 times trailing EBITDA.

Sysco Corporation (Sysco), along with its subsidiaries and divisions, is a North American distributor of food and related products primarily to the foodservice or food-away-from-home industry. Shares of SYY traded higher by 8.92% or $3.06/share to $37.37. In the past year, the shares have traded as low as $30.55 and as high as $36.05. On average, 3723800 shares of SYY exchange hands on a given day and today's volume is recorded at 61170976.