Sysco, the nation’s largest supplier of food and other goods to restaurants and catering businesses, has struck a deal to acquire family-owned Jetro Restaurant Depot for $29.1 billion, including debt.
The transaction, announced March 30, will be paid in a mix of cash and stock. Under the terms of the agreement, Restaurant Depot shareholders will receive $21.6 billion in cash and 91.5 million shares of Sysco stock, leaving them with about 16 percent of Sysco’s outstanding common shares after the deal closes.
The companies said the purchase price represents 14.6 times Restaurant Depot’s operating income.
Restaurant Depot, which will continue to be based in Whitestone, New York, operates as a members-only warehouse chain for the food industry, offering a model similar to Costco’s for independent restaurants. Its warehouses stock bulk quantities of meat, fresh produce, dry goods, and kitchen supplies, allowing customers to pick up inventory the same day at wholesale prices.
That model differs from Sysco’s traditional business, which is built around larger-volume customers that order frequently and expect delivery and other service support. By acquiring Restaurant Depot, Houston-based Sysco said it can reach more local customers, especially smaller operators that value convenience and affordability.
Restaurant Depot has 166 cash-and-carry warehouse locations across 35 states, serving roughly 725,000 independent restaurant operators each year. Sysco said it has “high confidence” in the potential to open more than 125 additional Restaurant Depot locations in key markets over the next 20 years. Those future sites would expand access to lower-cost food and supplies while also creating retail jobs in local communities.
“The combined company will have increased purchasing efficiencies, enabling lower prices for more customers,” Sysco CEO Kevin Hourican said in a release. “Even more importantly, we see a long runway of opening new Jetro Restaurant Depot warehouses, bringing the industry leader in affordability to hundreds of new communities and creating thousands of new jobs.”
Sysco, which has a market value of about $40 billion, supplies food and related products to restaurants, health care facilities, hotels, entertainment venues, and other institutions around the world.
To fund the cash portion of the acquisition, the company said it plans to use about $21 billion in new and hybrid debt, along with roughly $1 billion in cash and equity on hand.
Sysco also said it will pause its share repurchase program to prioritize reducing debt after the deal closes, with plans to resume buybacks once deleveraging is underway.
The companies said they expect the merger to generate about $250 million in annual cost savings within the first three years after closing.
