Filed by Sysco Corporation
Commission File No. 001-06544
Pursuant to Rule 425
under the Securities Act of 1933
Subject Company: USF Holding Corp.
Bill
DeLaney President, Chief
Executive
Officer
Chris Kreidler
Executive Vice
President, Chief
Financial Officer
16th Annual ICR XChange
Conference
January 14, 2014 |
2
Forward-Looking Statements
Statements included in this document and the related oral presentation that look forward
in time or that express beliefs, expectations, or hopes are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking
statements
are
all
statements
other
than
statements
of
historical
facts.
The
words
anticipates,
may,
can,
plans,
believes,
estimates,
expects,
projects,
intends,
likely,
will,
should,
to be
and any similar expressions or other
words of similar meaning are intended to identify those assertions as forward-looking
statements. These forward looking statements include
but
are
not
limited
to
our
estimates
regarding
synergies
from
our
proposed
merger
with
US
Foods
and
other
current
expectations
regarding
the
impact
of
the
proposed
merger
and
the
integration
of
US
Foods.
Such
forward-looking
statements
reflect
the
views
of
management
at
the
time
such
statements
are
made
and
are
subject
to
a
number
of
risks,
uncertainties,
estimates,
and
assumptions that may cause actual results to differ materially from current expectations,
including but not limited to the ability of the parties to satisfy the conditions
precedent and consummate the proposed merger, the timing of consummation of the proposed
merger,
the
ability
of
the
parties
to
secure
regulatory
approvals
in
a
timely
manner
or
on
the
terms
desired
or
anticipated,
the
ability
of Sysco to integrate the acquired operations, which is difficult to predict with accuracy at
this time, the ability to implement the anticipated
business
plans
of
the
combined
company
following
closing
and
achieve
anticipated
benefits
and
savings,
risks
related
to
disruption of managements attention from ongoing business operations due to the pending
merger, the effect of the announcement of the proposed merger on either partys
relationships with their respective customers, vendors, lenders, operating results and
businesses generally, including potential loss of customers or sales, the outcome of any legal
proceedings related to the proposed merger, the general risks associated with the
respective businesses of Sysco and US Foods, including the risk of interruption of
supplies due to lack of long-term contracts, intense competition, severe weather, crop
conditions, work stoppages, inflation risks, the impact of fuel prices, adverse
publicity, labor issues, and risks impacting the economy generally, including the risks that the current
general economic conditions will deteriorate, or that consumer confidence in the economy may
not increase and decreases in consumer spending, particularly on
food-away-from-home, may not reverse. For a discussion of additional factors impacting Sysco's
business,
see
Syscos
Annual
Report
on
Form
10-K
for
the
year
ended
June
29,
2013,
as
filed
with
the
Securities
and
Exchange
Commission
and
the
Company's
subsequent
filings
with
the
SEC.
For
a
discussion
of
additional
factors
impacting
US
Foods
business,
see US Foods
filings with the SEC. Neither Sysco nor US Foods undertakes to update or revise any
forward-looking statements, based on new information or otherwise.
Additional Information for US Foods Stockholders
In connection with the proposed transaction, Sysco currently intends to file a Registration
Statement on Form S-4 that will include a consent solicitation statement of US
Foods. Sysco also plans to file other relevant materials with the SEC. Stockholders of US Foods
are urged to read the consent solicitation statement/prospectus contained in the Registration
Statement and other relevant materials because
these
materials
will
contain
important
information
about
the
proposed
transaction.
These
materials
will
be
made
available
to
the stockholders of US Foods at no expense to them. The consent solicitation
statement/prospectus, Registration Statement and other relevant materials, including
any documents incorporated by reference therein, may be obtained free of charge at the SECs
website at www.sec.gov or for free from Sysco at www.sysco.com/investors or by emailing
investor_relations@corp.sysco.com. The consent solicitation statement/prospectus
and Registration Statements are not currently available. You may also read and copy any
reports, statements and other information filed by Sysco with the SEC at the SEC public
reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the
SEC at (800) 732-0330 or visit the SEC's website for further information on its public
reference |
Bill DeLaney
President & CEO |
4
Syscos Growth Has Outpaced the Market
2.9
2.0X
1.8X
1.6X
2.8X
0%
5%
10%
15%
20%
25%
1973-1980
1981-1990
1991-2000
2001-2010
2011-2012
Sales Growth
(CAGR for the period shown)
10.9%
6.9%
5.0%
3.8%
2.4%
17.1%
20.3%
9.8%
6.8%
6.7%
Source: Industry data adjusted to Syscos fiscal year basis, and based on Technomic
(market estimates as of May 2013), CRFA, Irish Food Board and internal reports for CY12
.. |
Over Time We Grow
our Business by Turning Adjacencies
into
Core Offerings
1999 Acquired
first meat
company
1985
SYGMA
formed
2002
Expansion
of Canadian
operations
2009 First
acquisition
in Ireland
2001
Acquired
Guest
Supply
2000
Acquired
first produce
company
2011
Formed
Sysco
Ventures
2012
Acquired
European
Imports
2013
Announced
Intent to
Merge with
US Foods
5
Traditional
Foodservice
We Continue to Expand our Capabilities |
Sustainable
Profitable
Growth
6
Key Areas of Strategic Focus
Operating
Margin
Asset Optimization
and Free Cash Flow |
-
Loyalty
-
Segment Focus
-
Corporate Brand
Sysco 360 (CRM)
Inside Sales
Sysco Market
Optimize Product
Assortment & Innovation
Leverage Buying Power
Accelerate Sales Growth
Merchandising
Marketing
Operations
Finance & HR
7
Platform
Technology Solutions
iCare
Key Initiatives
Technology Platform
Customer Insights
Sysco Ventures
Category Management
Sales Channels
Enterprise
Structure |
8
Bringing Together the Best of Both
Two Great Companies |
9
Asset Optimization
and Free Cash Flow
Operating
Margin
Sustainable
Profitable
Growth
Leverage customer
insights
Enhance and expand
channels
Increase customer
retention
Execute fold-in and
regional acquisitions
Build human capital
Expand international
growth
Invest prudently in the core
Increase working capital efficiency
Increase capital efficiency
Use our capital structure as a
competitive advantage
Reduce operating
costs
Lower product costs
Continue to develop
Sysco Ventures
Further develop
enterprise structure
Integrate higher
margin products
Consistent with Syscos Strategic Focus |
Shareholders
Employees
Suppliers
10
Customers
Combined strengths deliver greater value, more services and
innovation for customers
Strengthen
our
role
as
our
customers
most
valued
and
trusted
business partner
Achieve shared efficiencies with suppliers
Platform for enhanced innovation and development of exclusive
products
Leverage
revenue
growth
through
best-in-class
operating
efficiencies and lowest-cost to serve
Strong EPS growth and substantial cash flow
Benefits all stakeholders
Greater opportunities for career development
Enhanced financial stability drives benefits to employees
A Transformational Acquisition |
Chris
Kreidler EVP & CFO |
12
Approximate Total Transaction Value:
Equity
3.0B
Equity holders of US Foods will own
approx. 87 million shares or, 13%, of
combined company at closing, and
A representative of each of US Foods
majority shareholders will join
Syscos Board of Directors
Cash
0.5B
US Foods Net Debt
$4.7B
Sysco to assume or refinance
Total Enterprise Value
$8.2B
Represents
9.9x
US
Foods
LTM
adjusted
EBITDA
of
$826
million
1
US Foods LTM adjusted EBITDA of $826 million is as of September 28, 2013
Transaction Financing Structure
1 |
13
General & Administrative
Cost of Goods Sold
Warehouse and Distribution Productivity
Selling and Field Productivity
Distribution Network
Estimates developed by functional area, but
Based generally on public data
Estimates will be refined using people and knowledge from both companies
We
hope
to
identify
more
synergies
in
areas
we
have
not
reviewed
yet
(e.g. shared business services)
Synergy Estimates are Realistic and Achievable
At least $600 million in annual synergies after three to four years in
five key areas, including:
Current estimates developed using both bottom up and top down
approach
Integration team will further refine synergy estimates |
Synergy
General &
Admin.
Selling and
Field
Productivity
Warehouse
and
Distribution
Productivity
COGS
Distribution
Network
Identify duplicative
resources
Leverage combined
spend
Determine
combined category
management
approach
Apply warehouse best
practices
Technology driven
efficiencies
Inbound freight
optimization
Network
rationalization
Delivery
consolidation &
efficient routing
Field leadership
Leverage one sales
model
Combine evolving
ecommerce and
social media
initiatives
At Least $600 Million in Estimated Annual Synergies
14 |
Annual cost
synergies of at least $600 million Synergy estimates are realistic and
achievable These synergies will phase in over 3-4 years
Total
expenses
to
achieve
synergies
of
$700
-
$800
million,
spread over three years
Synergies
Integration
Team
15
Announced leadership team
Members will include key employees from both companies
Leverage experience and partnership with McKinsey
Committed to achievement of synergies
Regulatory
Review
Expect 9-12 month review process
Agency to conduct review not yet determined
We expect a collaborative process
We are confident this deal is good for consumers
Confident in Achieving a Successful Integration |
16
Integration Leader
(Chris Kreidler)
Steering Committee
Sr. Execs from Both
Companies
Track 1
Track 2
Track 4
Technology & Systems
Talent & Staffing
IMO will lead, plan and track the
integration
Overall leadership of the integration
Business Area
Organizational Design
Business Area
Business Area
Business Area
Business Area
Day 1 readiness
Synergy identification
Organization design
and structure
Cross-cutting work
that informs and
guides the business
teams
Business teams
Functional teams
Culture
Integration
Management Office
(IMO)
Track 3
Business Area
Business Area
Business Area
Integration Leadership Team Announced |
17
Earnings
Immediately accretive to earnings after adjusting for
transaction-related costs and amortization of intangibles
Synergies
Annual synergies of at least $600 million realized after
three to four years
Cash Flow
Approximate sales of $65 billion
Approximate cash flows of $2 billion
Balance Sheet
Balance sheet flexibility retained
Commitment to maintaining a strong investment grade
credit rating
Combination Creates Significant Shareholder Value |
|