Performance Food Group Company announced that it has entered into a definitive agreement with Cheney Bros – a leading independent broadline foodservice distributor based in Riviera Beach, Florida and owned by the Cheney family and Clayton Dubilier & Rice (CD&R) – under which PFG will acquire Cheney Brothers for $2.1 billion in cash.
This deal will create a more substantial presence in the Southeast region and provide additional distribution capacity. Cheney Brothers generates approximately $3.2 billion in annual revenue.
These are the compelling strategic and financial benefits:
1.) Expanding geographic reach – This addition increases the distribution footprint in key geographies enhances PFG’s existing distribution platform and overall density. With the deal, PFG will add an additional five state-of-the-art broadline distribution facilities with excess capacity for further growth across four Southeastern states.
2.) Complementary customer-centric models – This is consistent with go-to-market approaches and selling cultures are focused on customer success. And Cheney Brothers provides food & food service to a diverse range of customers, including independent restaurants, restaurant chains, hotels, country clubs, institutional groups, and other food service operators.
3.) Private brand opportunity – Cheney Brothers has a high mix of sales to independent restaurants but it has a low mix of private brand penetration to independent restaurants. And PFG has a meaningful opportunity to expand the sale of private brands to Cheney Brothers independent restaurant customers by leveraging PFG’s broad portfolio of private brands.
4.) Synergy opportunities – PFG expects to achieve about $50 million of annual run-rate synergies by the third full fiscal year following closing. The identified cost synergies are primarily in the areas of procurement, operations, and logistics and are expected to be achieved within the first three full fiscal years.
5.) The deal is expected to be accretive to PFG’s Foodservice and total company top-line revenue growth rate and adjusted EBITDA margins. The deal is anticipated to be accretive to Adjusted Diluted EPS by the end of the first full fiscal year, including year-one synergies.
6.) Solid valuation—The purchase price is 13 times Cheney Brothers’ unaudited Trailing 12-month Adjusted EBITDA. Including the expected $50 million of run rate synergies, it is 9.9 times.
This $2.1 billion purchase price is expected to be financed with borrowing on the company’s ABL facility and new Senior Unsecured Notes.
The deal , which has been approved by the Board of Directors of PFG, is subject to U.S. federal antitrust clearance and other customary closing conditions and is expected to close in calendar 2025. The transaction is not subject to PFG shareholder approval.
J.P. Morgan acted as the financial advisor to PFG. Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to PFG. Morgan Stanley acted as financial advisor and Davis Polk & Wardwell acted as legal counsel to Cheney Brothers.
KEY QUOTES:
“Cheney Brothers will be an outstanding addition to our Foodservice segment, and we are excited to welcome their many talented associates to the PFG family of companies. This acquisition will expand and enhance our offerings to a high-quality and diverse customer base. We have long admired the success of Cheney Brothers in the Southeastern U.S. and believe that the combination of our organizations will push the business to new heights. We are excited for what the future holds for the newest addition to PFG.”
– George Holm, PFG Chairman & CEO
“On behalf of the 3,600 Cheney Brothers associates, allow me to express our excitement at the prospect of being part of PFG’s organization. I have watched PFG grow into one of the country’s largest foodservice distributors by fostering new business relationships and maintaining a strong company culture. I believe this transaction will bring together two winning organizations and create a significant platform for growth. Together, the companies will build upon each other’s strengths and achieve outstanding success in the years ahead.”
– Byron Russell, Cheney Brothers’ CEO
