Sysco Sells $5 Billion in Bonds to Facilitate US Foods Merger


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Wed. September 24th, 2014 - by Jordan Okumura-Wright

HOUSTON, TX - Sysco has announced the sale of $5 billion in bonds in order to fund its proposed merger with US Foods. According to Bloomberg, the money raised from this deal would also go towards refinancing the debt of US Foods.

Bloomberg is reporting that the $5 billion sale, the largest in the company's history, is actually made up of 6 smaller transactions, the largest of which is a $1.25 billion sale of 3.5%, 10-year notes which yielded 102 basis points more than similar-maturity Treasury notes.

This sale showcases Sysco's confidence that its merger will be approved by regulatory officials, something which came into question after the FTC announced that it would be considering filing an antitrust lawsuit in order to block the transaction. As AndNowUKnow previously reported, the FTC will make a decision on whether or not to file this lawsuit within the next few weeks.

Moody's Investor Service reduced Sysco’s senior unsecured debt grade to A2 from A1 in the wake of the sale. Moody's cited an expected rise in leverage as a result of the US Foods merger as the reason for this move.

As of the time of writing this piece, Sysco’s Vice President for Corporate Communications Charley Wilson has so far declined to issue any comment on the transaction.

As of 1:20pm ET on Wednesday, September 24th, Sysco's stock is up $1.24/share, a 3.37% increase since the market's open.

 Source: Google Finance, Yahoo Finance, MSN Money

Stay tuned to AndNowUKnow for any future updates on Sysco and its impending merger with US Foods.

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