Performance Food Group’s $2.1bn power move: Cheney Bros acquisition to shake up the Southeast!

Performance Food Group Company has signed a definitive agreement to acquire Cheney Bros, Inc., a leading foodservice distributor based in Riviera Beach, Florida, for $2.1 billion in cash. This acquisition is more than just a financial transaction; it’s a strategic play that positions Performance Food Group Company to dominate the Southeastern U.S. market, a region that has seen significant growth in the foodservice sector.

Performance Food Group Company’s Southeast Focus

Performance Food Group Company’s decision to acquire Cheney Bros, Inc. is rooted in a broader strategy to strengthen its presence in key high-growth regions. The Southeast U.S. has emerged as one of the most dynamic markets for foodservice distribution, driven by a robust economy, a booming restaurant industry, and an increasing population. Florida, in particular, has become a hotbed for foodservice demand, with its diverse population and tourism-driven economy creating a ripe environment for food distributors.

Performance Food Group Company’s $2.1 billion acquisition of Cheney Bros, Inc. boosts its Southeast presence with $3.2B in sales.

By acquiring Cheney Bros, Inc., Performance Food Group Company taps into a well-established network that includes five state-of-the-art distribution facilities with excess capacity, providing ample room for growth. This acquisition will allow Performance Food Group Company to enhance its service offerings and meet the rising demand in Florida, Georgia, North Carolina, and South Carolina. These states are not only economically vibrant but also strategically located, offering easy access to other parts of the country.

The Cheney Bros, Inc. Legacy

Cheney Bros, Inc. has a storied history dating back to 1925, when it was founded in West Palm Beach, Florida. What began as a small family-owned business has grown into one of the leading foodservice distributors in the Southeast, with over 1.5 million square feet of distribution space and a robust inventory of over 65,000 items. The company’s commitment to quality and service has earned it a loyal customer base that spans independent restaurants, hotels, country clubs, and institutional groups.

The acquisition by Performance Food Group Company is expected to build on this legacy, integrating Cheney Bros, Inc.’s customer-centric approach with Performance Food Group Company’s expansive resources and capabilities. The synergy between the two companies is expected to drive innovation and deliver superior value to customers, particularly in the independent restaurant segment, where Cheney Bros, Inc. has a strong presence.

Industry Context and Competitive Landscape

The U.S. foodservice distribution industry is highly competitive, with major players such as Sysco Corporation, US Foods Holding Corp., and Gordon Food Service vying for market share. Performance Food Group Company’s acquisition of Cheney Bros, Inc. is seen as a strategic response to this competitive pressure, enabling it to expand its market share and reinforce its position as one of the top distributors in North America.

The foodservice distribution market has been evolving rapidly, with trends such as increased demand for local and sustainable products, the rise of private labels, and the growing importance of technology in logistics and supply chain management. Performance Food Group Company’s acquisition strategy aligns with these trends, particularly in its focus on expanding private brand offerings through the Cheney Bros, Inc. network.

Financial Implications and Growth Potential

The financial benefits of the acquisition are significant. The transaction is expected to be accretive to Performance Food Group Company’s adjusted diluted earnings per share (EPS) by the end of the first full fiscal year, driven by approximately $50 million in annual run-rate cost synergies. These synergies are expected to come from procurement efficiencies, operational improvements, and enhanced logistics capabilities.

Moreover, the valuation of the deal, with a purchase price representing a multiple of 13.0x Cheney Bros, Inc.’s trailing 12-month adjusted EBITDA, reflects Performance Food Group Company’s confidence in the long-term growth potential of the combined entity. The ability to leverage Cheney Bros, Inc.’s existing infrastructure and customer relationships will be key to driving revenue growth and improving profitability.

Looking Ahead: Performance Food Group Company’s Vision for the Future

Performance Food Group Company’s acquisition of Cheney Bros, Inc. is not just about expanding its geographic footprint; it’s about creating a platform for sustained growth and innovation in the foodservice distribution industry. With the addition of Cheney Bros, Inc., Performance Food Group Company is well-positioned to capitalize on the evolving market dynamics and deliver exceptional value to its customers across the Southeast and beyond.

As the foodservice industry continues to evolve, Performance Food Group Company’s strategic investments and acquisitions will likely play a pivotal role in shaping the future of food distribution in North America. The company’s ability to integrate new acquisitions, enhance its service offerings, and drive operational efficiencies will be crucial to maintaining its competitive edge in a rapidly changing market.