South African-born billionaire Natie Kirsh has sold his US-based company, Jetro Restaurant Depot, to Sysco Corporation for a staggering $29.1 billion, including debt. This deal will create one of the largest food-service groups in the US, with Jetro shareholders receiving $21.6 billion in cash and 91.5 million Sysco shares.
Kirsh, 94, founded Jetro in 1976 and has since expanded the business significantly, operating 166 large-format warehouse stores across 35 states. The company generated about $16 billion in revenue and $2.1 billion in earnings before interest, tax, depreciation, and amortization last year.
Jetro Restaurant Depot Acquisition
Sysco supplies food to restaurants, hospitals, and schools across the US and had a market value of about $39 billion as of Friday. By purchasing Jetro, Sysco will gain access to the higher-margin and growing cash-and-carry channel, which is the primary source of supply for many smaller restaurants. According to the Sysco website, the company plans to fund the deal with $1 billion of cash on hand and $21 billion of new debt and hybrid debt.
Impact on the Food-Service Industry
The combined company will have increased purchasing efficiencies, enabling lower prices for customers, according to Kevin Hourican, chair of the board and chief executive officer of Sysco. This deal also presents a new growth opportunity for Sysco, with Jetro having higher Ebitda multiples and free cash flow conversion than Sysco’s standalone business.
Some of the key benefits of this acquisition include:
- Increased purchasing efficiencies, leading to lower prices for customers
- A long runway of opening new Jetro Restaurant Depot warehouses, bringing the industry leader in affordability to hundreds of new communities
- Creation of thousands of new jobs
Kirsh grew up in Potchefstroom, South Africa, a university town about 120 kilometers southwest of Johannesburg, where his family ran a malt business. In his 20s, he moved into grain milling and later wholesale distribution, eventually founding Jetro in the US.
For more information on Sysco Corporation, visit the Wikipedia page on the company.
