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$8.2 Billion US Foods Sale Involves Wachtell, Simpson, Debevoise, Others

By Tom Huddleston Jr.

Sysco Corporation said Monday it will buy rival food distributor US Foods from its majority shareholders, private equity firms Clayton, Dublier & Rice and Kohlberg Kravis Roberts, in a deal worth $8.2 billion once assumed debt is factored in.

Houston-based Sysco has agreed to pay roughly $3.5 billion in cash and stock for US Foods, which generated $21.7 billion in revenue last year through sales of more than 350,000 different food products—including such brands as Chef's Line, Devonshire and Monarch—to a customer base ranging from restaurants to hospitals to schools. Sysco has also agreed to assume $4.7 billion in Rosemont, Ill.-based US Foods' debt. Once the transaction closes—expected to come in the third quarter of 2014, pending antitrust approval—CDR and KKR together will own a combined 13 percent of Sysco.

Sysco CEO Bill DeLaney said in a statement that US Foods has a portfolio of products that complements his company's existing stable and that the acquisition will increase Sysco's scale and geographic reach. The deal solidifies Sysco's position as the world's largest broadline food distributor and creates a combined company that expects to generate about $65 billion in annual revenues.

Wachtell, Lipton, Rosen & Katz is serving as lead counsel to Sysco with a team led by corporate partners Andrew Brownstein and Benjamin Roth. Also working on the deal are antitrust partners Damian Didden and Joseph Larson, executive compensation and benefits partner David Kahan, and tax partner T. Eiko Stange. Associates are Neil Chatani, Tijana Dvornic, Jenna Levine, Christina Ma, Marianna Ofosu, Gregory Pessin, Michael Schobel and Peter Zuckerman. All are in New York.

Atlanta-based Arnall, Golden & Gregory is also representing Sysco, a longtime firm client. M&A partner Adam Skorecki is leading a team advising on due diligence, securities, document review and environmental review aspects of the deal. Also involved in the matter are corporate and securities partners Joseph Alley Jr. and Sean Fogarty, real estate partner Scott Shuman and environmental partner John Spinrad.

Sysco's general counsel is Russell Libby.

Weil, Gotshal & Manges is advising Goldman Sachs, which is providing committed bridge financing to Sysco. Banking and finance partner Morgan Bale and capital markets partner Matthew Bloch are leading the Weil team. M&A partner Michael Aiello, environmental partner Annemargaret Connolly, structured finance partner John Dedyo, tax partner William "Larry" Horton and structured finance counsel Nancy Lynch are also working on the matter. Weil associates are Brandon Cherry, Sarah Davis, Brian Drozda, Michael Esposito, Maria Lei, Matthew Morton, Megan Pendleton, Peter Puk, Faiza Rahman, Eric Remijan, Meera Sitaram and Megan Ward. All are in New York except Connolly and Morton, who are in Washington.

Meanwhile, Simpson Thacher & Bartlett and Debevoise & Plimpton are advising US Foods in connection with the transaction.

Corporate partner Marni Lerner is leading the team from Simpson Thacher, a frequent KKR adviser. Antitrust partner Joseph Tringali, compensation and benefits partner Andrea Wahlquist, tax partner Nancy Mehlman, capital markets partner Joseph Kaufman and corporate senior counsel Michael Isby are also working on the deal. Associates are Jacqueline Barbera, Michael Cardella, Evan Cohen, Alina Finkelshteyn, Isaac Gruber, Brittany McCants, Jakob Rendtorff and Marcela Robledo. All are in New York.

Debevoise's team is comprised of corporate cochair Paul Bird, finance chair David Brittenham, corporate partner Steven Slutzky, securities counsel Lee Turnier Barnum and associate Emily Zand. All are in New York.

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