Houston-based Sysco is moving to swallow Jetro Restaurant Depot – the members-only, cash-and-carry chain better known simply as Restaurant Depot – in a deal that clocks in at about $29.1 billion. Boards at both companies have already signed off, but the transaction still has to clear regulators before anything is final.
Deal details and structure
Under the agreement, Jetro Restaurant Depot shareholders are set to receive $21.6 billion in cash along with 91.5 million Sysco shares. Using Sysco’s late March share price, the company pegs the total value of the transaction at roughly $29.1 billion. According to Sysco, the companies are aiming to close the deal by the third quarter of Sysco’s fiscal 2027, assuming the usual closing conditions and regulatory approvals fall into place.
What Jetro brings to the table
Jetro started out in Brooklyn and grew up on a membership-based, cash-and-carry model built for independent restaurants, caterers and other small food businesses that prefer to load up their own carts instead of waiting on a delivery truck. The Associated Press and company materials note that Jetro now runs roughly 166 large warehouse-style stores spread across 35 states, serving hundreds of thousands of local foodservice customers.
How Sysco will finance it and Wall Street’s reaction
To pay for the deal, Sysco is expected to cover most of the cash portion with about $21 billion in new and hybrid debt, plus roughly $1 billion in cash or equity. The company plans to halt share repurchases for now while keeping its dividend in place. Investing.com reported that Sysco shares slipped around 3 percent in premarket trading as investors weighed the hit from higher leverage against projected cost savings of about $250 million within three years.
Regulatory road ahead
Despite the boardroom green light, the combination will have to get past federal regulators, who are expected to scrutinize the tie-up given the size and reach of the merged operation. The Federal Trade Commission’s prior move to block a 2015 Sysco merger attempt is part of the backdrop regulators and industry observers are likely to keep in mind this time around.
What this means for local restaurants…