Gordon Food Service not surprised by Sysco merger


The giant merger between Sysco and US Foods that had the business world buzzing last week was not unexpected by officials at Wyoming-based Gordon Food Service.

“The food service distributor landscape has been changing significantly over the past 10 years with industry consolidation. Within that time frame, over 100 independent distributors have been acquired,” said Deb Abraham of Gordon Food Service. “The recent news about the merger wasn’t completely unexpected. Sysco has made it very public that they are aggressively seeking to buy companies.”

Sysco Corp. of Houston and privately held US Foods of Rosemont, Ill., have agreed to merge, at a cost to Sysco of approximately $8.2 billion, giving the new Sysco anticipated annual sales of approximately $65 billion.

The merger makes Sysco the only coast-to-coast food service company in the U.S., according to a report in The Wall Street Journal, and the merger must be approved by the government’s anti-trust regulators.

Abraham said the acquisition trend in the food service industry is expected to continue as companies look for opportunities to grow, reduce costs and improve efficiencies. The industry supplies restaurants and other food service operations.

She said Gordon Food Service has grown over the years via organic growth as well as through acquisitions. Within the past two years the company acquired Perkins, a leading broadline food service distributor located on the east coast, and purchased substantially all the assets of Market Day, a leading food fundraising company headquartered in Itasca, Ill.

Gordon employs more than 2,000 people at its West Michigan facilities, and more than 17,000 throughout North America, according to the company.

In May 2011, Bloomberg reported Sysco’s third-quarter sales had just risen to $9.8 billion, with acquisitions adding to its increased business. The report stated that Sysco CEO Bill DeLaney, who assumed that job in 2010, was very focused on acquisitions to grow the company.

The report said Sysco had completed seven or more acquisitions since 2006. Bloomberg also said GFS was among potential targets for acquisition by Sysco, but Abraham said then in an interview that “Gordon is and intends to remain a family owned and operated company.”

GFS said in an email last week to the Business Journal that it “distributes to foodservice operators within the Midwest, Northeast and Southeast regions of the United States and coast-to-coast in Canada. Sysco also serves customers within these territories.”

GFS has been described by The Right Place as “North America’s largest family-owned food service distributor.”

Sysco and US Foods are the two largest food service distributors in the U.S. The combined companies will operate under the Sysco name with headquarters in Houston. The merger has been approved by the directors of each company but is subject to approval by USF stockholders and regulatory approvals, including antitrust approval, according to Sysco.

Sysco said the transaction is expected to close in the third quarter of calendar year 2014.

The aggregate purchase price to be paid by Sysco will consist of $500 million in cash and approximately 89.1 million shares of its common stock. According to the 8-K it filed Dec. 10 with the SEC, Sysco also will assume or refinance all of USF’s outstanding debt, an amount of approximately $4.6 billion.

Sysco has a major food distribution center in Grand Rapids. The local operations referred the Business Journal to corporate headquarters in Houston, but no one there returned calls requesting more information.

Gordon Food Service is now one of the largest employers in Wyoming. It has been headquartered there since moving from the city of Grand Rapids in 1962. In 2012, it completed a new $59 million, 386,000-square-foot corporate headquarters on Gezon Parkway and relocated more than 1,000 employees to the new headquarters, including some from Ontario, Canada.

In 2011, GFS was named one of the top 15 “best” family-run, privately held companies in the United States, according to Forbes magazine. Forbes said then the company’s annual revenue was estimated at $7.1 billion. It was founded by Dutch immigrants in Grand Rapids in 1897.

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