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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 about a quarter of the $235 billion North American market.Sysco, whose shares jumped about 25 percent to a record high in early trading, will also assume US Foods' debt of about $4.7 billion as it combines its supply chain expertise with the strong consumer-facing technologies of US Foods.Shareholders of US Foods, owned by affiliates of private equity firms Clayton, Dubilier & Rice and KKR & Co, will own about 13 percent of Sysco after the closing of the deal, which creates a company with revenue of $65 billion."Combining and maximizing the significant strengths of two outstanding companies is certain to be of tremendous advantage in supporting our customers," US Foods Chief Executive John Lederer said in a statement on Monday.

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 12.12% or $4.16/share to $38.47. 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 46329736.