Performance Food Group Expands Southeast Presence with Cheney Bros Acquisition
Tuesday, Oct 8, 2024 4:25 pm ET
2min read Performance Food Group Company (PFG) has completed its acquisition of Cheney Bros., Inc., a leading independent broadline foodservice distributor based in Riviera Beach, Florida. This strategic move, valued at $2.1 billion in cash, expands PFG's geographic reach and distribution capacity in the Southeast region, further solidifying its competitive position.
The acquisition of Cheney Bros., which generates approximately $3.2 billion in annual revenue, adds five state-of-the-art broadline distribution facilities to PFG's network, with excess capacity for further growth across Florida, Georgia, North Carolina, and South Carolina. This expansion enhances PFG's existing distribution platform and overall density, enabling it to better serve its diverse customer base.
PFG expects to achieve approximately $50 million of annual run-rate synergies by the third full fiscal year following the closing of the transaction. Identified cost synergies are primarily in the areas of procurement, operations, and logistics. By leveraging PFG's broad portfolio of private brands, the company has a meaningful opportunity to expand the sale of private brands to Cheney Bros' independent restaurant customers.
The acquisition complements PFG's customer-centric operating models and selling cultures, which are focused on customer success. Cheney Bros provides food and foodservice to a diverse range of customers, including independent restaurants, restaurant chains, hotels, country clubs, institutional groups, and other foodservice operators. This complementary customer base will drive synergies and strengthen PFG's market penetration in the Southeast region.
George Holm, PFG Chairman & CEO, expressed his excitement about the acquisition: "We are excited to close the acquisition and welcome Cheney’s many talented associates to the PFG family of companies. Cheney has built a strong business, and this transaction expands PFG’s platform and geographic reach to help our diverse customer base thrive."
Byron Russell, Cheney Bros' CEO, also shared his enthusiasm: "On behalf of the 3,600 Cheney Brothers associates, allow me to express our excitement at the prospect of being part of PFG’s organization. I believe this transaction will bring together two winning organizations and create a significant platform for growth."
The transaction is expected to be accretive to PFG's Foodservice segment, total company top-line revenue growth rate, and adjusted EBITDA margins. Furthermore, the transaction is anticipated to be accretive to Adjusted Diluted EPS by the end of the first full fiscal year, including year one synergies.
For the full fiscal year 2025, PFG now expects net sales to be in a range of approximately $62.5 billion to $63.5 billion compared to the prior expectation for net sales in a range of approximately $60 billion to $61 billion. Additionally, PFG now expects Adjusted EBITDA to be in a $1.7 billion to $1.8 billion range compared to the prior expectation of a $1.6 billion to $1.7 billion range.
The acquisition of Cheney Bros., Inc. by Performance Food Group Company is a strategic move that will enhance PFG's competitive position in the Southeast region, drive synergies, and create a stronger platform for growth. This transaction underscores PFG's commitment to expanding its geographic reach and better serving its diverse customer base.
The acquisition of Cheney Bros., which generates approximately $3.2 billion in annual revenue, adds five state-of-the-art broadline distribution facilities to PFG's network, with excess capacity for further growth across Florida, Georgia, North Carolina, and South Carolina. This expansion enhances PFG's existing distribution platform and overall density, enabling it to better serve its diverse customer base.
PFG expects to achieve approximately $50 million of annual run-rate synergies by the third full fiscal year following the closing of the transaction. Identified cost synergies are primarily in the areas of procurement, operations, and logistics. By leveraging PFG's broad portfolio of private brands, the company has a meaningful opportunity to expand the sale of private brands to Cheney Bros' independent restaurant customers.
The acquisition complements PFG's customer-centric operating models and selling cultures, which are focused on customer success. Cheney Bros provides food and foodservice to a diverse range of customers, including independent restaurants, restaurant chains, hotels, country clubs, institutional groups, and other foodservice operators. This complementary customer base will drive synergies and strengthen PFG's market penetration in the Southeast region.
George Holm, PFG Chairman & CEO, expressed his excitement about the acquisition: "We are excited to close the acquisition and welcome Cheney’s many talented associates to the PFG family of companies. Cheney has built a strong business, and this transaction expands PFG’s platform and geographic reach to help our diverse customer base thrive."
Byron Russell, Cheney Bros' CEO, also shared his enthusiasm: "On behalf of the 3,600 Cheney Brothers associates, allow me to express our excitement at the prospect of being part of PFG’s organization. I believe this transaction will bring together two winning organizations and create a significant platform for growth."
The transaction is expected to be accretive to PFG's Foodservice segment, total company top-line revenue growth rate, and adjusted EBITDA margins. Furthermore, the transaction is anticipated to be accretive to Adjusted Diluted EPS by the end of the first full fiscal year, including year one synergies.
For the full fiscal year 2025, PFG now expects net sales to be in a range of approximately $62.5 billion to $63.5 billion compared to the prior expectation for net sales in a range of approximately $60 billion to $61 billion. Additionally, PFG now expects Adjusted EBITDA to be in a $1.7 billion to $1.8 billion range compared to the prior expectation of a $1.6 billion to $1.7 billion range.
The acquisition of Cheney Bros., Inc. by Performance Food Group Company is a strategic move that will enhance PFG's competitive position in the Southeast region, drive synergies, and create a stronger platform for growth. This transaction underscores PFG's commitment to expanding its geographic reach and better serving its diverse customer base.
