US Foods Holding Corp. has closed its $970 million acquisition of Smart Foodservice Warehouse Stores from the private equity owner of Smart & Final Stores.
Rosemont, Ill.-based US Foods said Friday that, with the addition of Smart Foodservice, it expects to achieve $20 million in annual run-rate cost synergies by the end of 2023, namely via purchasing efficiencies and private-label expansion. The deal was announced in early March,
Portland, Ore.-based Smart Foodservice has approximately 900 employees and operates 70 small-format stores in California, Washington, Oregon, Idaho, Nevada, Utah and Montana, serving small and midsize restaurants and other food businesses. Last year, the chain totaled sales of about $1.1 billion.
Plans call for Smart Foodservice to keep its leadership team and operate as a separate business unit. US Foods said the merger will require minimal integration.
“We are pleased to welcome Smart Foodservice to the US Foods family,” US Foods Chairman and CEO Pietro Satriano said in a statement. “With our shared commitment to supporting restaurant operators and providing best-in-class customer service, Smart Foodservice will complement our Chef’Store cash-and-carry model and provide a platform to enhance our presence in this attractive channel.”
The second-largest U.S. foodservice distributor, US Foods has said the addition of Smart Foodservice’s smaller cash-and-carry outlets — offering about 8,000 SKUs each — will give it better reach to independent restaurants that prefer a self-serve model and bring another growth channel for current customers.
US Foods acquired Smart Foodservice from funds managed by affiliates of Apollo Global Management. The deal excludes the Smart & Final retail grocery business, which was separated from Smart Foodservice prior to the transaction. Last April, Apollo unveiled a $1.12 billion buyout agreement to take Smart & Final private.
With the divestiture of Smart Foodservice, Commerce, Calif.-based Smart & Final now operates about 255 warehouse-style grocery stores, mainly under the Smart & Final Extra! banner.
US Foods finalized the acquisition as foodservice and restaurants remain one of the hardest-hit business sectors since much of the nation shut down to slow the spread of coronavirus. The International Foodservice Distributors Association projected in March that foodservice wholesalers stand to lose $24 billion in top-line sales, receivables and perishable inventory over the next three months due to the COVID-19 pandemic.
And earlier this month, the National Restaurant Association said the restaurant industry has lost two-thirds of its workforce from coronavirus lockdowns and estimated $30 billion in March. The industry is on track to lose $50 billion in April and over $240 billion nationwide by the end of the year, the association projected.