ROSEMONT, Ill. – US Foods Holding Corp. and Services Group of America (SGA) entered a definitive agreement under which US Foods will acquire SGA’s Food Group of Companies for $1.8 billion in cash.

US Foods plans to finance the acquisition primarily with $1.5 billion in fully committed term loan financing from J.P. Morgan and Bank of America Merrill Lynch. Existing liquidity will be applied to the remaining balance. The company expects the acquisition to be accretive to adjusted earnings per share in the second full year following closing. The transaction is subject to regulatory approval and other customary closing conditions.

SGA’s Food Group of Companies consists of five operating companies that generated combined net sales of $3.2 billion in 2017.

• Food Services of America Inc. (FSA) is a regional broadline distribution company that serves 16 states in the West and Midwest from nine distribution centers. FSA accounted for 75 percent of net sales. FSA’s focus is serving independent restaurants, which account for approximately 40 percent of its net sales base.
• Systems Services of America Inc. (SSA) is a multi-unit distribution foodservice company specializing in distribution to casual and fast-casual foodservice establishments and regional and national quick-service restaurant chains. FSA accounted for 21 percent of net sales.
• Amerifresh Inc., which specializes in produce sourcing and marketing, accounted for 2 percent of net sales.
• Ameristar Meats Inc. is a supplier of custom meat products, including 18 different beef programs. Ameristar Meats generated 1 percent of net sales.
• GAMPAC Express Inc. specializes in supply chain planning and logistics. GAMPAC accounted for 1 percent of net sales.

US Foods said the acquisition is a good fit because SGA’s geographic footprint enables US Foods to expand its existing network in the Northwest.

SGA’s Food Group of Companies serves approximately 33,000 customers via 12 distribution centers. The broadline distributor’s 20 private brands are expected to enhance US Foods’ overall scale. Additionally, the acquisition gives US Foods opportunities for growth through the roll out US Foods’ product portfolio and suite of value-added services to SGA’s customers. US Foods expects to achieve approximately $55 million in annual run-rate cost synergies by the end of fiscal 2022. Areas for savings include distribution, procurement and administrative expenses.

“This acquisition will significantly increase US Foods’ reach across key markets in the attractive and growing Northwest region of the U.S. and adds one of the most well-regarded regional distributors to our company,” said US Foods Chairman and CEO Pietro Satriano. “With a shared commitment to customer service, including a proven track record of leveraging technology and private brands to meet customer needs, SGA’s Food Group of Companies is an ideal fit. The company’s unique merchandising programs, mature local sourcing capabilities and track record of operational excellence will be strong additions to our business. We look forward to welcoming the talented teams at SGA’s Food Group of Companies to US Foods, providing customers with even better service and expanded capabilities, and delivering accelerated growth and value to our shareholders.”