ROSEMONT, IL - Today US Foods announced its conditional approval from the Federal Trade Commission (FTC) for a $1.8 billion cash acquisition of SGA’s Food Group of Companies. The acquired companies include Food Services of America (FSA), Systems Services of America, Amerifresh, Ameristar Meats, and GAMPAC Express. The deal is expected to be finalized within the next few days.
“We are excited to finalize this transaction and enhance our overall scale and footprint in the attractive Northwest and West regions. Both companies share a strong commitment to innovation and customer service, which will enable us to bring US Foods’ industry-leading product innovation and technology to SGA Food Group customers as well as to share SGA Food Group’s unique center of plate, produce, and logistics capabilities with US Foods customers,” commented Chairman and CEO Pietro Satriano. “We look forward to welcoming SGA Food Group and their talented team members to US Foods.”
Although the company has recieved approval, FTC’s condition requires US Foods to divest three FSA distribution facilities located in Kent, Washington; Meridian, Idaho; and Fargo, North Dakota. The company plans to retain a portion of the business currently serviced from the Kent facility. A press release reported that the divestiture is roughly $90 million, and will be put towards US Foods’ debt. The combined annual Adjusted EBITDA of the facilities was approximately $21 million for fiscal 2018. Each of the divestitures are underway with each of the respective buyers, and US Foods expects to close these transactions within 30 days of the acquisition.
According to a press release, the completion of this deal means:
- An increase in the estimated annual run-rate for synergies from $55 million to $65 million
- An estimated one-time costs of $45 million to achieve these synergies
- SGA Food Group will contribute approximately $30 million to Adjusted EBITDA for the remainder of fiscal 2019 and approximately $105 million on an annual run rate basis for fiscal 2019
- An increase in interest by $3 million from the addition of SGA Food Group’s existing assets
- An increase in Adjusted Diluted EPS range to $2.30-2.40 for fiscal 2019
To read the original press release in full, click here. For more news in the industry’s financial sector, keep checking in with ANUK.
