Market Overview

US Foods to Acquire SGA's Food Group of Companies for $1.8 Billion


Expands Presence Across Attractive and Growing Northwest Region

Expected to Become Accretive to Adjusted EPS in the Second Full
Year Following Closing

US Foods Holding Corp. (NYSE:USFD) and Services Group of America today
announced that they have entered into a definitive agreement under which
US Foods will acquire five operating companies collectively known as
SGA's Food Group of Companies, for $1.8 billion in cash. The transaction
has been unanimously approved by US Foods' Board of Directors.

Headquartered in Scottsdale, Arizona, SGA's Food Group of Companies has
combined 2017 net sales of $3.2 billion and approximately 3,400
employees. SGA's Food Group of Companies currently operates as five
separate operating companies:

  • Food Services of America, Inc. (FSA): One of the largest
    regional broadline distribution companies in the U.S. serving 16
    states in the West and Midwest from nine distribution centers; 75% of
    net sales;
  • Systems Services of America, Inc. (SSA): Multi-unit
    distribution foodservice company specializing in distribution to
    casual and fast casual dining establishments and regional and national
    QSR chains; 21% of net sales;
  • Amerifresh, Inc.: Strong produce sourcing and marketing
    capabilities, 2% of net sales;
  • Ameristar Meats, Inc.: Provider of custom meat products,
    including 18 different beef programs to meet customer specifications;
    1% of net sales; and
  • GAMPAC Express, Inc: Supply chain planning and logistics; 1% of
    net sales.

These five operating companies together deliver superior solutions for
the diverse customers served by SGA's Food Group of Companies. FSA has a
strong focus on serving independent restaurants, which account for
approximately 40% of its net sales base, and employs a forward-thinking
approach to technological leadership to serve customer needs.

"This acquisition will significantly increase US Foods' reach across key
markets in the attractive and growing Northwest region of the U.S. and
adds one of the most well-regarded regional distributors to our
company," commented US Foods Chairman and CEO Pietro Satriano. "With a
shared commitment to customer service, including a proven track record
of leveraging technology and private brands to meet customer needs,
SGA's Food Group of Companies is an ideal fit. The company's unique
merchandising programs, mature local sourcing capabilities and track
record of operational excellence will be strong additions to our
business. We look forward to welcoming the talented teams at SGA's Food
Group of Companies to US Foods, providing customers with even better
service and expanded capabilities, and delivering accelerated growth and
value to our shareholders."

Services Group of America Executive Vice President and COO Slade Stewart
said, "For the past 46 years, we have had the vision to become a leading
national foodservice company. This is an exciting milestone on our
journey and provides more success and growth opportunities for our
customers and our Associates."

Compelling Strategic and Financial Benefits

  • Complementary Geographic Footprint: The transaction expands US
    Foods' network in the attractive and growing Northwest.
  • Increased Scale and Accelerated Growth: SGA's Food Group of
    Companies approximately 33,000 customers, 12 distribution centers and
    more than 20 private brands will enhance US Foods' overall scale. In
    addition, combining the best of both companies' processes and
    technologies, along with the potential to roll out US Foods' leading
    product portfolio and suite of value-added services to the customers
    of SGA's Food Group of Companies, will drive increased growth within
    the combined company.
  • Attractive Synergy Opportunity: US Foods expects to achieve
    approximately $55 million in annual run-rate cost synergies by the end
    of fiscal 2022, primarily driven by savings in distribution,
    procurement and administrative expenses.
  • Attractive Valuation: The purchase price reflects a multiple of
    12.5x SGA's Food Group of Companies 2018E Adjusted EBITDA of $123
    million, after taking into account the approximately $260 million
    estimated present value of cash tax benefits to be realized as a
    result of the acquisition. Including $55 million in annual run-rate
    synergies, the price reflects a 2018E Adjusted EBITDA multiple of 8.6x.
  • Accretive to Adjusted EPS: Excluding amortization, the
    transaction is expected to become accretive to US Foods' Adjusted EPS
    in the second full year following closing.

Acquisition Financing Details

US Foods will finance the acquisition primarily with $1.5 billion in
fully committed term loan financing from J.P. Morgan and Bank of America
Merrill Lynch and will fund the balance of the purchase price through
its existing liquidity resources. At the closing of the acquisition, US
Foods' pro forma net leverage is expected to be 4.1x. Given the combined
company's strong cash flow generation, including synergies, US Foods
expects to reduce net leverage to approximately 3.0x by the end of
fiscal 2020.

The acquisition is subject to regulatory approval and other customary
closing conditions.

Centerview Partners is acting as financial advisor to US Foods, Cravath,
Swaine & Moore LLP is acting as its legal advisor, and KKR Capital
Markets is acting as its debt capital markets advisor. Morgan Stanley &
Co. LLC is acting as financial advisor to Services Group of America, and
Davis Polk & Wardwell LLP is acting as its legal advisor.

Conference Call and Webcast Information

US Foods will host a live conference call and webcast today, July 30,
2018 at 7:30am CDT to discuss the SGA's Food Group of Companies
acquisition and second quarter fiscal 2018 earnings, which were
announced separately today. The second quarter fiscal 2018 conference
call has been rescheduled to today from its originally scheduled date of
Tuesday, August 7, 2018.

The conference call can be accessed live over the phone by dialing
844-292-0976; the conference ID number is 7567095. Listeners are asked
to please dial in 10 minutes prior to the call start time and provide
the conference ID number to be connected.

The conference call will also be webcast live from the company's
Investor Relations website at
The presentation slides reviewed during the webcast will be available
shortly before that time. An archived copy of the webcast will be
available later that same day.

About US Foods

US Foods is one of America's great food companies and a leading
foodservice distributor, partnering with approximately 250,000
restaurants and foodservice operators to help their businesses succeed.
With 25,000 employees and more than 60 locations, US Foods provides its
customers with a broad and innovative food offering and a comprehensive
suite of e-commerce, technology and business solutions. US Foods is
headquartered in Rosemont, IL, and generates approximately $24 billion
in annual revenue. Visit
to learn more.

About SGA's Food Group of Companies

SGA's Food Group of Companies is comprised of five businesses providing
a broad array of foodservice solutions to a wide spectrum of customers
including independent and chain foodservice operators. The businesses
are Food Services of America, Systems Services of America, Amerifresh,
Ameristar Meats and GAMPAC.

Forward-Looking Statements

Statements in this press release, including financial estimates and
statements as to the completion and effects of the contemplated
acquisition of SGA's Food Group of Companies, are "forward‐looking
statements" within the meaning of the federal securities laws and are
subject to risks, uncertainties and other important factors that could
cause our actual results to differ materially from those expressed in,
or implied by, the forward‐looking statements. These forward-looking
statements include, but are not limited to, statements about the
benefits of the acquisition, including financial and operating results,
the combined company's plans, objectives, expectations and intentions,
and other statements that are not historical facts, and are based upon
our current beliefs and expectations and are subject to significant
risks and uncertainties which are beyond our control. Among the risks
and uncertainties that could cause actual results to differ from those
expressed in the forward-looking statements are: (1) the occurrence of
any event, change or other circumstance that could give rise to the
termination of the purchase agreement, (2) the risk that the necessary
regulatory approvals may not be obtained as a result of conditions that
are not anticipated, (3) risks that any of the closing conditions to the
acquisition may not be satisfied in a timely manner, (4) failure to
realize the benefits of the acquisition, (5) the effect of the
announcement of the acquisition on the ability of SGA's Food Group of
Companies to retain customers, retain and hire key personnel, and
maintain relationships with suppliers, and on their operating results
and businesses generally and (6) potential litigation in connection with
the acquisition. A discussion of additional risks and uncertainties is
set forth in the sections entitled "Risk Factors" and "Forward-Looking
Statements" in our Annual Report on Form 10-K for the fiscal year ended
December 30, 2017, which was filed with the Securities and Exchange
Commission on February 27, 2018. The forward-looking statements
contained in this press release speak only as of the date of this
release. We undertake no obligation to update or revise any
forward-looking statements.

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