HOUSTON — Sysco Corp. has reached agreement to acquire Brakes Group from Bain Capital Private Equity for approximately $3.1 billion. Brakes Group is a European foodservice distributor with operations in the United Kingdom, Ireland, France, Sweden, Spain, Belgium and Luxembourg. Under terms of the transaction, Sysco said it would repay approximately $2.3 billion of Brakes Group’s financial debt.
Headquartered in London, Brakes Group will operate as a standalone company within Sysco. The Brakes Group business will continue to be led by CEO Ken McMeikan, with the rest of the company’s management team remaining in place.
|Bill DeLaney, CEO of Sysco|
“We look forward to welcoming Brakes Group, its 15,000 employees, and Ken McMeikan and his highly respected leadership team to the Sysco family of companies,” said Bill DeLaney, CEO of Sysco. “This transaction will unite Sysco with a leading foodservice distributor in Europe with demonstrated capability to sustainably grow its business over time. Beginning with a common customer-centric mindset, our companies are strategically aligned with compatible cultures and similar business models. We expect to retain key members of Brakes Group’s talented leadership team and to experience little distraction from integration given the minimal overlap of the businesses. Sysco’s management team remains confident in and committed to achieving our previously announced three-year plan financial objectives.”
McMeikan said the move to join forces with Sysco fits Brakes Group’s next stage of development.
|Ken McMeikan, CEO of the Brakes Group|
“Our mission is simple: to help businesses who serve food to thrive, and becoming part of the Sysco family will help us get closer toward achieving that great outcome for our customers, colleagues and suppliers,” he said. “Similar to Sysco’s approach, Brakes Group serves thousands of customers across Europe every day, including pubs, restaurants, hotels, hospitals, schools, contract caterers and more. We have continued to flourish in recent years, and the significant investment that has been made in Brakes Group provides us with a very solid platform for further growth as part of Sysco.”
Brakes Group was established in 1958 by William, Frank and Peter Brake as a poultry supplier to caterers in Great Britain. Today, it supplies an extensive range of fresh, refrigerated and frozen food products, as well as non-food products and supplies, to more than 50,000 food service customers. The group of companies has leading market positions in the UK, 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 private brand products.
Brakes Group companies include: Brakes, Brakes Catering Equipment, Brake France, Country Choice, Davigel, Freshfayre, M&J Seafood, Menigo Foodservice, Pauley’s, Wild Harvest and Woodward Foodservice. The company had revenues of nearly $5 billion in fiscal 2015.
“We have complete confidence that Ken’s team will achieve its planned business objectives,” DeLaney said. “We expect to augment this growth by leveraging our combined scale to provide our customers with an even more competitive offering. We look forward to servicing customers across Europe and beyond, with the goal to be their most valued and trusted business partner.”
Sysco’s family of food service distribution companies includes operations in the United States, Canada, Ireland, Northern Ireland and The Bahamas, as well as joint ventures in Mexico and Costa Rica. Additionally, Sysco International Food Group (IFG) provides services to a number of multi-national contract customers conducting business in many different countries.
At closing, the combined companies are expected to generate annualized sales of approximately $55 billion. The purchase price, the refinancing of Brakes Group’s debt, and other fees and expenses in connection with the transaction are expected to be financed with new debt, commercial paper and cash on Sysco’s balance sheet. The acquisition of Brakes Group is expected to be immediately accretive to Sysco’s earnings, the company said.
“Our strong financial position and free cash flow allow us to pursue this proposed acquisition, while maintaining our current capital allocation strategy,” DeLaney said. “We remain committed to reinvesting in our business, growing our dividend, expanding our business through strategic acquisition and repurchasing shares opportunistically.”