US Foods Reveals $500M Convertible Preferred Equity Investment from KKR
ROSEMONT, IL - US Foods has been popping up on our radar pretty frequently as of late, recently teaming up with retailers and even Chef Rick Bayless. Now, the foodservice distributor has yet another bevy of moves. The company announced that affiliates of global investment firm KKR have agreed to purchase $500 million in newly issued convertible preferred stock of US Foods. US Foods also announced its $970 million acquisition of Smart Foodservice Warehouse Stores will be finalized by April 24, 2020.
“We are pleased to see KKR return as a shareholder of US Foods as we seek to further fortify our balance sheet during the current difficult environment,” said US Foods Chairman and CEO Pietro Satriano. “KKR will be a valuable partner for us as we continue to focus on our associates, customers, communities, and shareholders as the impacts of COVID-19 unfold. This transaction positions us to continue to build on our strengths as the environment improves over time.”
In connection with this transaction, US Foods expects to appoint Nate Taylor, Partner and Co-Head of Americas Private Equity at KKR, as a new Director to its Board.
“We are excited to once again partner with the strong management team at US Foods,” Taylor said. “Given our history as a long-term investor in the company, we are very familiar with the sector and US Foods’ leading position and believe the company has the capabilities and resources to navigate the current environment and create value over the long term.”
KKR is funding the investment primarily through its KKR Americas XII Fund. According to a press release, the $500 million convertible preferred stock investment carries a 7 percent dividend, which will be payable in-kind in its first year and in cash or in-kind, at US Foods’ option, thereafter. For more details of the transaction, you can read the announcement in its entirety here.
US Foods will close its previously announced acquisition of Smart Foodservice Warehouse Stores. Smart Foodservice operates 70 small-format cash-and-carry stores across California, Washington, Oregon, Idaho, Nevada, Utah, and Montana that serve small and mid-sized restaurants and other food business customers with a broad assortment of products.
With another investment and acquisition under its belt, what other plans might US Foods have in store? Keep reading AndNowUKnow as we bring you the latest in the retail, foodservice, and fresh produce sector.