March 30 (Reuters) - Sysco said on Monday it would buy catering supplier Jetro Restaurant Depot in a $29 billion deal including debt, expanding the top U.S. food distributor's reach among price-conscious independent restaurants.
Shares of Sysco, which has a market capitalization of $39.2 billion, were down More than 5% in premarket trading after the company also said it would fund the deal through $21 billion of new and hybrid debt, along with $1 billion of cash and equity on hand.
Family‑owned Jetro Restaurant Depot operates a wholesale cash‑and‑carry model, where customers pay upfront for goods such as food, beverages and take-out containers, complementing Sysco’s delivery network serving restaurants, hospitals and hotels.
The acquisition would be the latest major deal across consumer‑facing industries, following recent merger talks involving companies such as Unilever, Estee Lauder and Pernod Ricard, as firms look for scale to navigate weaker demand and persistently higher costs.
Restaurant Depot shareholders would receive $21.6 billion in cash and 91.5 million Sysco shares, according to the deal terms. They will own 16% of Sysco upon the closing of the deal, the companies said.
"Sysco and Jetro Restaurant Depot will enhance value for small independent restaurants and the consumers they serve by expanding access to more affordable, fresh food products and delivering more choice and convenience," Sysco CEO Kevin Hourican said in a statement and highlighted how the combined company would lower prices for more customers.
Last year, US Foods ended merger talks with Performance Food in what would have been a tie-up between the nation's No. 2 and No. 3 food service distributors to challenge industry leader Sysco and cut costs for consumers.
Sysco also said it was pausing its share repurchase program and reaffirmed its annual forecasts.
Known for its steaks, fillets, and frozen-food products, which it supplies to fast-food chains such as KFC and Subway, Sysco had lifted its annual profit forecast earlier in the year, enjoying resilient demand even amid macroeconomic pressures.
Sysco expects the deal to add to earnings per share in the mid- to high-single-digits in the first year following its close, which is expected by the third quarter of Sysco's fiscal 2027.
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