Sysco revealed on Monday its plan to acquire catering supplier Jetro Restaurant Depot in a $29 billion transaction, aiming to broaden the leading US food distributor’s footprint among budget-conscious independent restaurants. Following the announcement, Sysco’s shares dropped by as much as 14.8%, as the company intends to fund the purchase with $21 billion in new and hybrid debt, alongside $1 billion in cash and equity. With a market capitalization of $39.2 billion, this acquisition marks a significant move amid ongoing consolidation in consumer-facing industries, following recent merger discussions involving firms like Unilever, Estee Lauder, and Pernod Ricard, as companies seek scale to counteract weaker demand and persistent cost pressures.
In a notable shift, Sysco is responding to structural challenges in its traditional distribution model by entering the cash-and-carry wholesale sector, where Jetro Restaurant Depot operates. The family-owned business runs a wholesale cash-and-carry system, requiring customers to pay upfront for items including food, beverages, and takeaway containers, complementing Sysco’s existing delivery services to restaurants, hospitals, and hotels. Restaurant Depot’s network includes approximately 166 warehouse locations across 35 US states, representing a higher-margin segment.
Sysco CEO Kevin Hourican emphasized the resilience of the cash-and-carry model, especially during economic downturns, noting that Restaurant Depot tends to gain market share due to its competitive pricing, making it a preferred choice for customers. Under the terms of the deal, Restaurant Depot shareholders will receive $21.6 billion in cash plus 91.5 million Sysco shares valued at about $7.5 billion based on last Friday’s closing price, resulting in roughly a 16% ownership stake in the combined entity.
In a significant development regarding regulatory scrutiny, Hourican expressed confidence in obtaining approval from US antitrust authorities, highlighting that Sysco and Restaurant Depot serve different market channels with minimal customer overlap. He pointed out that the distinct customer bases and potential synergies in delivering value to end consumers differentiate this transaction from previous blocked mergers, such as Sysco’s failed $3.5 billion acquisition of US Foods in 2015, which was halted due to antitrust concerns.
Discussions between the two companies have been ongoing for several years, with the Kirsh family, founders of Restaurant Depot, deciding to sell now partly due to succession considerations. Nathan Kirsh, the founder, is in his 90s, and his children are not involved in daily operations. The family concluded that Sysco represents the best steward to carry the business forward into future generations.
Sysco anticipates that the acquisition will increase earnings per share by a mid- to high-single-digit percentage within the first year after closing, which is expected by the third quarter of fiscal 2027. The company also announced a pause in its share repurchase program while reaffirming its full-year financial outlook. Known for supplying steaks, fillets, and frozen foods to fast-food chains such as KFC and Subway, Sysco had earlier raised its profit forecast for the year as demand remained steady despite macroeconomic challenges.
