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PFG to purchase Reinhart Foodservice from Reyes Holdings

Second sizable 2019 acquisition moves PFG ahead of US Foods in sales volume, for now

Performance Food Group (PFG) agreed to purchase Reinhart Foodservice from Reyes Holdings, LLC for $2.0B. The acquisition of Reinhart is sure to change the broadline distributor landscape. Reinhart generates $6B in annual net sales and is the second largest privately-held foodservice distributor in the United States. With Reinhart, PFG expands its geographic territory in addition to enhancing distribution for PFG’s customer base in select markets.

Additionally, PFG is sure to become the second largest foodservice distributor by sales volume after two acquisitions of distributors with sales volume in excess of $5B this year. The company agreed to pay an amount equal to 8.1 times of Reinhart’s adjusted EBITDA. Both PFG are still clearing typical regulatory approvals.

The most recent quarter proved to be robust quarter the top three broadline distributors as they posted strong sales and gross profit increases. PFG led the pack with an 8.1 percent increase in sales, according to an analysis performed by Pentallect, a foodservice consultancy. However, due to high operational costs, PFG underperformed Sysco and US Foods relative to profit.

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PFG purchase of Reinhart projected to generate savings, efficiencies

Through the acquisition, valued at $1.7B net of tax benefit, PFG projects it will gain $50M in annualized savings based on anticipated synergies. For PFG, the purchase of Reinhart follows other notable acquisitions, including those of Eby-Brown, announced in March, and its merger with Vistar. Pentallect notes that Vistar’s integration has been successful in terms of absorbing non-traditional distributor business.

Increasingly, distributors consider e-commerce suppliers and Amazon as a potential threat. Nonetheless, experts have noted that customer care and cold storage supply chain are impediments to e-suppliers becoming full-blown threats.

“We are excited to announce the strategic acquisition of Reinhart and welcome them to Performance Food Group,” said George Holm, PFG chairman, president and chief executive. “I’ve known the Reyes family for nearly two decades, and they have built and grown an incredible company. We believe the addition of Reinhart and its complementary strengths will expand Performance Foodservice’s broadline presence, improve our network efficiency and help us achieve our long-term growth goals.

PFG posted revenue of $4.7B in its Q3 2019, an increase of 4.7 percent. Adjusted EBITDA increased 11.0 percent to $106.1M. Also, for the nine months of 2019, PFG reported year-to-date net sales of $13.8B, a 6.3 percent increase.

The PFG purchase of Reinhart may put the distributor ahead of US Foods as the second largest foodservice distributor in the United States by sales volume. Both are looking to solidify a number 2 spot. And both are identifying opportunities in growing acquisitions, geography, non-traditional verticals and sales volume.

Photo credit: Performance Food Group

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