Sysco acquires Brakes foodservice distribution business in $3.1bn deal

By Vince Bamford contact

- Last updated on GMT

Brakes Group turnover grew 6.5% last year to almost $5bn
Brakes Group turnover grew 6.5% last year to almost $5bn

Related tags: United kingdom

US distributor Sysco has acquired European foodservice business Brakes Group for $3.1bn.

London-based Brakes has operations in the UK, Ireland, France, Sweden, Spain, Belgium and Luxembourg, and generated a turnover of nearly $5bn in 2015. This was a 6.5% increase on the previous fiscal year.

Brakes distributes a wide range of products – including 4,000 own-brand lines - through businesses such as Country Choice, which provides chilled and frozen baked goods including pasties and cookies.

Debt repayment

The deal, which includes repayment of $2.3bn of Brakes Group’s financial debt, is expected to complete by the end of July this year following review by European Union competition authorities.

Brakes is currently owned by Bain Capital Private Equity, which has invested more than $141m (£100m) in the distributor since acquiring it in 2007, in areas including e-commerce, multi-temperature distribution and customer service.

Sysco said the acquisition would expand its presence in the UK and Ireland while taking it further into Europe and give it the opportunity to grow in these markets.

Standalone operation

Brakes will operate as a standalone company within Sysco and will continue to be led by chief executive officer Ken McMeikan.

This transaction will unite Sysco with a leading foodservice distributor in Europe with demonstrated capability to sustainably grow its business over time,​” said Sysco chief executive officer Bill DeLaney.

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​.”

Combined turnover of $55bn

DeLaney added that the combined businesses – which will have an annual turnover of around $55bn - would leverage their scale to bring customers “an even more​” competitive offering.

Sysco supplies food products to 425,000 customers including restaurants, healthcare and educational facilities. It operates 196 distribution facilities and generated sales of more than $48bn in 2015. Its own foodservice distribution companies include operations in the US, Canada, Ireland, Northern Ireland and The Bahamas. Sysco also has joint ventures in Mexico and Costa Rica, while Sysco International Food Group has contract customers in a range of countries.

Sysco has paid around 12 times Brakes Group’s 2015 EBITDA of £184m ($260) for the business, and expects the internal rate of return for the transaction to be about 13%.

Company profile: Brakes Group

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Brakes business Country Choice launched mini savory pasties last month

Brakes Group was established in 1958 by William, Frank and Peter Brake as a poultry supplier to caterers in Great Britain.

It supplies a range of fresh, refrigerated and frozen food products – including 4,000 own-brand lines - to more than 50,000 foodservice customers in the UK, France and Sweden, Ireland, Belgium, Spain and Luxembourg.

Brakes Group companies include: Brakes, Brakes Catering Equipment, Brake France, Country Choice, Davigel, Freshfayre, Fresh Direct, M&J Seafood, Menigo Foodservice, Pauley’s, Wild Harvest and Woodward Foodservice. It’s customer base includes pubs, restaurants and hotels, schools, hospitals and contract caterers.

The company’s turnover grew 6.5% in 2015 to almost $5bn, with Brakes recording an EBITDA of $260m (£184m).

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