In a recent public statement, SYSCO Corporation (NYSE:SYY) announced that it would acquire foodservice distribution firm Brakes Group from Bain Capital. It has agreed to pay a whopping sum of $3.1 billion for the same. As per the reports, out of this amount, $2.3 billion will be in the form of debt and the remaining will be paid in cash.
As a result of this deal, SYSCO will get a significant market share in Europe without any hassle.
Insights of Matter
In a statement on Monday, SYSCO stated that Brakes generated around $5 billion sales in 2015. Once the transaction gets completed, both the firms expect to make around $55 billion together. If everything goes fine, the transaction will be finalized before the end of company’s fiscal year in July.
SYSCO has been ruling North American food distribution market for many years, and now intends to expand its offerings in other parts of the world as well. Last year, it tried to buy the rival food distributor named US Foods for $3.5 billion; however, things didn’t work out properly. Reports claim that a Federal judge didn’t let this deal get executed, saying that it would cut short the competition and result in increased prices in food distribution industry.
After this failed attempt, SYSCO shifted its focus to the European market and announced the acquisition of Brakes Group. Investors showed their disinterest in this deal, which is likely to add pressure to company’s debt position. SYSCO’s shares declined by 4.9% in NYSC, biggest single day drop in the last three years. Before this announcement, company’s shares had gained 9.7% since the starting of 2016.
Brakes Group employs around 15,000 employees as of now with operations in Ireland, UK, Spain, France, and other European countries. SYSCO hopes that this deal will help it achieve significant growth in the coming months.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of journaltranscript.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:
The Next Big Thing In Biotech?https://journaltranscript.com
Get our top rated alerts on the biotech sector
Miner Stock About To Explodehttps://www.journaltranscript.com
Investors are flocking to this stock like no tomorrow !