A US food service distributor backed by KKR and Clayton, Dubilier & Rice (CD&R), is planning an initial public offering, according to filings with the US Securities Exchange Commission (SEC). The news comes less than a year after a failed merger between the company, US Foods, and its main competitor Sysco.
US Foods is the second largest food service distributor in the United States, supplying independent and regional restaurant chains and healthcare and hospitality centres.
The company listed an initial target of $100 million to establish the registration fee. But that total is likely to change. It has not yet specified a price range or the number of stocks to be offered. It has not named an underwriter for the offering.
The two private equity firms, which are US Foods’ principal owners, will retain majority voting power after the IPO. The company will list on the New York Stock Exchange under the symbol USFD.
The company plans to use the proceeds from the offering primarily to pay off debts, with any remaining funds going toward general corporate purposes, according to the filings.
The company is highly leveraged, with $4.7 billion in total debt as of 26 September, roughly 6.7 times earnings before taxes, depreciation and amortisation (EBITDA) of $724 million.
According to financial statements submitted with the SEC, US Foods holds $9.5 billion in assets. In the first 39 weeks of 2015, the company saw net sales of $17.2 billion and $137 million in operating income. Net income for the company reached $177 million 2015, following five consecutive years of net income. In FY 2014, the company saw negative net earnings of $73 million, net sales of $23 billion and EBITDA of $664 million.
The offering comes months after the US Federal Trade Commission (FTC) scuttled an attempted $3.7 billion sale of the company to rival Sysco. In June 2015, a federal judge sided with the FTC’s argument that a merger of the two biggest food distributors in the country would stifle competition. The companies had spent two years working on an integration plan to appease antitrust concerns, including the sale of some US Foods assets to Performance Food Group.
US Foods, formerly US Foodservice, took on its current name when it was acquired by KKR and CD&R from Dutch supermarket company Royal Ahold for $7.1 billion in 2007.