Sysco Corporation (NYSE:SYY) today announced that it has completed
the $3.1 billion acquisition of Brakes Group, a leading foodservice
distributor in the United Kingdom, France and Sweden, with
additional operations in Ireland, Spain, Belgium and
Luxembourg.
“We are excited to welcome the Brakes Group into the Sysco
family of companies,” said Bill DeLaney, Sysco’s chief executive
officer. “This acquisition significantly strengthens Sysco’s
position as the world’s leading foodservice distributor and offers
attractive opportunities for organic growth and future expansion in
European markets. Sysco and Brakes are a natural fit given our
shared commitment to putting customers first and the compatibility
of our strategies, business models and cultures.”
Headquartered in London, Brakes Group will operate as a
wholly-owned subsidiary of Sysco under the leadership of Ken
McMeikan, Brakes Group chief executive officer. “We are very
excited to combine forces with the world’s top foodservice
distributor,” McMeikan said. “We see great opportunity to create
value over the long-term by leveraging the combined skills and
experience of Sysco and Brakes associates to better serve our
customers. Together, we will be better positioned to serve our
customers on both sides of the Atlantic.”
Financial DetailsIn calendar year 2015, Brakes
Group’s annual revenue was nearly $5 billion (£3.3 billion), a 6.5
percent increase from the previous fiscal year.
After closing, the combined companies are expected to generate
annualized sales of approximately $55 billion. The purchase price
of approximately $3.1 billion (£2.3 billion), which includes the
refinancing of Brakes Group’s debt, was financed with new debt that
Sysco issued in both U.S. dollars and Euro.
Brakes Group BackgroundBrakes Group was
originally established in 1958 by William, Frank and Peter Brake as
a poultry supplier to caterers in Great Britain. It is a leading
foodservice provider in Europe by revenues, supplying an extensive
range of fresh, refrigerated and frozen food products, as well as
non-food products and supplies, to more than 50,000 foodservice
customers. The group of companies has leading market positions in
the U.K., France and Sweden, in addition to a presence in Ireland,
Belgium, Spain and Luxembourg. Brakes Group supplies more than
50,000 products, including an extensive portfolio of more than
4,000 own-brand products. The innovative own-brand portfolio is
valued by customers, having been developed over more than 55 years
to assist professional caterers in producing high-quality meals.
All products are delivered through Brakes Group’s industry-leading
distribution networks.
Brakes Group companies include: Brakes, Brakes Catering
Equipment, Brake France, Country Choice, Davigel, Fresh Direct,
Freshfayre, M&J Seafood, Menigo Foodservice, Pauley’s, Wild
Harvest and Woodward Foodservice.
About SyscoSysco is the global
leader in selling, marketing and distributing food products to
restaurants, healthcare and educational facilities, lodging
establishments and other customers who prepare meals away from
home. Its family of products also includes equipment and supplies
for the foodservice and hospitality industries. The company
operates 194 distribution facilities serving approximately 425,000
customers. For fiscal year 2015 that ended June 27, 2015, the
company generated sales of more than $48 billion. For more
information, visit www.sysco.com or connect with Sysco on
Facebook at www.facebook.com/SyscoCorporation or Twitter at
https://twitter.com/Sysco. For important news and information
regarding Sysco, visit the Investor Relations section of the
company’s Internet home page at www.sysco.com/investors.html, which
Sysco plans to use as a primary channel for publishing key
information to its investors, some of which may contain material
and previously non-public information. Investors should also follow
us at www.twitter.com/SyscoStock and download the Sysco IR
App, available on the iTunes App Store and the Google Play Market.
In addition, investors should continue to review our news releases
and filings with the Securities and Exchange Commission. It is
possible that the information we disclose through any of these
channels of distribution could be deemed to be material
information.
Forward-Looking Statements
Statements made in this press release that look forward in time
or that express management’s beliefs, expectations or hopes are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements reflect the views of management at the time such
statements are made and are subject to a number of risks,
uncertainties, estimates, and assumptions that may cause actual
results to differ materially from current expectations. These
statements include our plans and expectations related to the Brakes
Group acquisition being accretive to earnings and the annualized
sales of the combined companies. The success of our plans and
expectations regarding the future financial performance of the
combined companies are subject to the general risks associated with
our business, including the risks of interruption of supplies due
to lack of long-term contracts, severe weather, crop conditions,
work stoppages, intense competition, technology disruptions,
dependence on large regional and national customers, inflation
risks, the impact of fuel prices, adverse publicity, and labor
issues. Risks and uncertainties also include risks impacting the
economy generally, including the risks that the current general
economic conditions will deteriorate, or consumer confidence in the
economy or consumer spending, particularly on food-away-from-home,
may decline. Market conditions may not improve. If sales from our
locally managed customers do not grow at the same rate as sales
from regional and national customers, our gross margins may
decline. Our ability to meet our long-term strategic objectives
depends largely on the success of our various business initiatives,
including efforts related to revenue management, expense
management, our digital e-commerce strategy and any efforts related
to restructuring or the reduction of administrative costs. There
are various risks related to these efforts, including the risk that
these efforts may not provide the expected benefits in our
anticipated time frame, if at all, and may prove costlier than
expected; the risk that the actual costs of any initiatives may be
greater or less than currently expected; and the risk of adverse
effects to our business, results of operations and liquidity if
past and future undertakings, and the associated changes to our
business, do not prove to be cost effective or do not result in the
cost savings and other benefits at the levels that we anticipate.
Our plans related to and the timing of any initiatives are subject
to change at any time based on management’s subjective evaluation
of our overall business needs. If we are unable to realize the
anticipated benefits from our efforts, we could become cost
disadvantaged in the marketplace, and our competitiveness and our
profitability could decrease. Capital expenditures may vary based
on changes in business plans and other factors, including risks
related to the implementation of various initiatives, the timing
and successful completion of acquisitions, construction schedules
and the possibility that other cash requirements could result in
delays or cancellations of capital spending. Periods of high
inflation, either overall or in certain product categories, can
have a negative impact on us and our customers, as high food costs
can reduce consumer spending in the food-away-from-home market, and
may negatively impact our sales, gross profit, operating income and
earnings, and periods of deflation can be difficult to manage
effectively. Fluctuations in inflation and deflation, as well as
fluctuations in the value of foreign currencies, are beyond our
control and subject to broader market forces. Expanding into
international markets presents unique challenges and risks,
including compliance with local laws, regulations and customs and
the impact of local political and economic conditions, and such
expansion efforts may not be successful. Any business that we
acquire, including the Brakes transaction, may not perform as
expected, and we may not realize the anticipated benefits of our
acquisitions. Realizing the anticipated benefits from the
Brakes transaction may take longer than expected.
Expectations regarding the accounting treatment of any acquisitions
may change based on management’s subjective evaluation. The
uncertainty surrounding the implementation and effect of Brexit,
including the commencement of the exit negotiation period, the
terms and conditions of such exit, the uncertainty in relation to
the legal and regulatory framework that would apply to the UK and
its relationship with the remaining members of the EU (including,
in relation to trade) during a withdrawal process and after any
Brexit is effected, has caused and is likely to cause increased
economic volatility and market uncertainty globally. For a
discussion of additional factors impacting Sysco’s business, see
the Company’s Annual Report on Form 10-K for the year ended
June 27, 2015, as filed with the Securities and Exchange
Commission, and the Company’s subsequent filings with the SEC.
Sysco does not undertake to update its forward-looking statements,
except as required by applicable law.
For more information:
Neil Russell
Investor Contact
T: 281-584-1308
Nehl Horton
Media Contact
T: 281-899-4759
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