March 6, 2020 / 2:53 PM / a month ago

US Foods to buy Smart Foodservice for $970 million

(Reuters) - Food distribution company US Foods Holding Corp (USFD.N) said on Friday it would buy Smart Foodservice Warehouse Stores from private equity firm Apollo Global Management (APO.N) for $970 million, in a move to expand its base of restaurant customers.

Smart Foodservice operates 70 cash-and-carry stores in the United States, which cater to small and mid-sized restaurants. The company had revenue of about $1.1 billion in 2019.

Size is critical in the U.S. food distribution industry where margins are razor thin and larger companies have more negotiating power to squeeze lower prices from suppliers.

US Foods said it will finance, the all-cash deal mainly with $700 million in loans from Citigroup and Bank of America.

The company’s shares fell nearly 7% in early trading.

Reporting by Uday Sampath in Bengaluru; Editing by Arun Koyyur

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