Performance Food Group Grows Southeast Reach in $2.1B Deal
RICHMOND, Va. — Performance Food Group Co. (PFG) entered into a definitive agreement to acquire broadline foodservice distributor Cheney Bros. Inc. for $2.1 billion in cash.
The acquisition will potentially help PFG create a stronger presence in the Southeast region while also providing additional distribution capacity, the companies stated.
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Cheney Brothers, currently owned by the Cheney family and Clayton Dubilier & Rice, generates approximately $3.2 billion in annual revenue.
"Cheney Brothers will be an outstanding addition to our Foodservice segment, and we are excited to welcome their many talented associates to the PFG family of companies," said George Holm, PFG chairman and CEO. "We have long admired the success of Cheney Brothers in the Southeastern U.S. and believe that the combination of our organizations will push the business to new heights."
PFG believes the deal will produce numerous advantages beyond the expansion of its distribution footprint. Cheney Brothers provides food and foodservice to a diverse range of customers including independent restaurants, restaurant chains, hotels, country clubs, institutional groups and other foodservice operators, which will help its parent company add new customers to its base.
Additionally, Cheney's high mix of sales to independent restaurants but low mix of private brand penetration will give PFG the opportunity to expand the sale of private brands to existing customers by leveraging its broad portfolio of private brands.
PFG expects the transaction to be accretive to its foodservice and total company top-line revenue growth rate and adjusted EBITDA margins. Furthermore, the transaction is anticipated to be accretive to Adjusted Diluted EPS by the end of the first full fiscal year, including year one synergies.
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The $2.1 billion purchase price is expected to be financed with borrowing on the company's ABL facility and new senior unsecured notes. The transaction, which has already been approved by the board of directors of PFG, is subject to U.S. federal antitrust clearance and other customary closing conditions. The transaction is not subject to PFG shareholder approval.
The deal is anticipated to close in 2025.
J.P. Morgan acted as the financial advisor, and Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to PFG. For Cheney Brothers, Morgan Stanley & Co. acted as financial advisor, while Davis Polk & Wardwell acted as legal counsel.
Based in Richmond, PFG has a nationwide network of more than 150 distribution facilities and 37,000 associates. It markets and delivers food and related products to 300,000-plus locations, including independent and chain restaurants, schools, business and industry locations, healthcare facilities, vending distributors, office coffee service distributors, big box retailers, theaters and convenience stores.