Brakes bought by Sysco in $3.1bn deal

Brakes Group has been bought by US foodservice operator Sysco in a $3.1bn (£2.2bn) deal.

Sysco said its board had unanimously approved the acquisition, which it expected to complete before the end of July, pending clearance from EU competition regulators.

Brakes will operate as a standalone company within Sysco. CEO Ken McMeikan would continue to lead the company, and “his management team and the rest of the employee base will remain in place,” Sysco said.

“We look forward to welcoming Brakes Group, its 15,000 employees, and Ken McMeikan and his highly respected leadership team to the Sysco family of companies,” said Sysco CEO Bill DeLaney.

“This transaction will unite Sysco with a leading foodservice distributor in Europe with demonstrated capability to sustainably grow its business over time. Beginning with a common customer-centric mindset, our companies are strategically aligned with compatible cultures and similar business models. We expect to retain key members of Brakes Group’s talented leadership team and to experience little distraction from integration given the minimal overlap of the businesses. Sysco’s management team remains confident in and committed to achieving our previously announced three-year plan financial objectives.”

Brakes’ current owner Bain Capital bought the business for around €1.3bn (then worth £880m) in 2007.

This deal, which includes the repayment of approximately $2.3bn of Brakes’ financial debt, is worth 12 times Brakes Group’s 2015 adjusted EBITDA of approximately £184m.

Dwight Poler, a MD of Bain Capital Private Equity, commented: ”Since we bought Brakes Group in 2007, the business has been transformed with capital investment of more than £100m in an e-commerce platform, multi-temperature distribution infrastructure, and customer service enhancements. There is still a huge market opportunity ahead that I am confident Brakes Group is very well placed to deliver with Sysco.”

In its 2015 financial year Brakes Group’s revenues were nearly $5bn (£3.3bn), a 6.5% increase from the previous fiscal year. Brakes currently has market leading positions in the UK, France and Sweden, in addition to a presence in Ireland, Belgium, Spain and Luxembourg

The combined Sysco and Brakes are expected to generate annualized sales of approximately $55bn.

McMeikan said: “Last year we said we would look for the best strategic option for Brakes Group’s next stage of development. We are delighted to have now concluded this process by joining Sysco. Our mission is simple: to help businesses who serve food to thrive, and becoming part of the Sysco family will help us get closer toward achieving that great outcome for our customers, colleagues and suppliers.

DeLaney added: “We have complete confidence that Ken’s team will achieve its planned business objectives. We expect to augment this growth by leveraging our combined scale to provide our customers with an even more competitive offering. We look forward to servicing customers across Europe and beyond, with the goal to be their most valued and trusted business partner.”