US Foods, a portfolio company of Clayton, Dubilier & Rice and KKR, has filed for an IPO with intentions of listing on the NYSE under the symbol USFD. The planned public offering follows a failed $8.2 billion merger with Sysco (NYSE: SYY) that was terminated last June over regulatory concerns. CD&R (49.3% pre-IPO stake) and KKR (49.3%) had acquired the U.S. foodservice distributor from Royal Ahold (AMS: AH) in 2007 for $7.1 billion.
During the 39 weeks ended September 26, US Foods reported net income of $177 million on about $17.2 billion in net sales, representing a slight drop on the top line but a positive swing forward from the $121 million loss recorded during the same period in 2014; adjusted EBITDA came in at $620 million, slightly down YoY.
US Foods had $4.7 billion in aggregate debt outstanding as of September 26. We previously saw the negative credit impact the debt had on Sysco as it planned financing for the now-axed M&A deal, and while the IPO pipeline has been soft, US Foods' PE sponsors need to tap the capital markets to help bring that load down. That would help reduce the risk of future credit downgrades and avoid an increasing hit to the company's ability to find attractive debt as needed.
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