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KKR’s US Foods acquires produce distributor before possible IPO

The acquisition is the third by the food services distribution company as it bulks up its food technology and distribution capacity.

Private equity-backed US Foods has acquired fruit and vegetable processor and distributor Freshway Foods for an undisclosed sum, ahead of a possible IPO.

The Ohio-based company processes, packages and distributes value-added produce, including pre-sliced fruits and vegetables to consumers and retailers in the eastern US.

The acquisition is the third by the food service distributor since it filed for an initial public offering in February. It bought foodservice data and analytics company Food Genius in April. In February, the company acquired Cara Donna Provision, a wholesale supplier for restaurants and food service companies.

US Foods, formerly US Foodservice, took its current name when it was acquired by KKR and Clayton, Dubilier & Rice (CD&R) from Dutch supermarket company Royal Ahold for $7.1 billion in 2007. It is the second largest food service distributor in the United States and employs approximately 25,000 people in 61 locations nationwide.

Earlier this year, the company filed for an initial public offering to raise more than $1 billion, but market watchers are now tipping a mid-May IPO. Under the offering, KKR and CD&R will retain majority ownership of the company. 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.

The acquisition of Freshway Foods is expected to close on 10 June, 2016.