July 30, 2018 / 11:21 AM / 5 months ago

UPDATE 1-US Foods to buy SGA's Food Group for $1.8 bln

(Adds deal details)

July 30 (Reuters) - Food distribution company US Foods Holding Corp said on Monday it would buy SGA's Food Group of Cos for $1.8 billion in cash to expand into the northwestern part of the United States.

With 12 distribution centers and more than 20 private brands, SGA's Food had 2017 net sales of $3.2 billion from its five operating units - Food Services of America Inc (FSA), Systems Services of America Inc, Amerifresh Inc, Ameristar Meats Inc and GAMPAC Express Inc.

US Foods said it expected to achieve about $55 million in annual run-rate cost savings by the end of fiscal 2022 and that the deal was likely to add to its adjusted profit in the second year following the closing of the transaction.

The deal will be funded primarily through a term loan of $1.5 billion from J.P. Morgan and Bank of America Merrill Lynch and the balance through its existing liquidity resources, US Foods said.

Centerview Partners is the financial adviser to US Foods, while Cravath, Swaine & Moore LLP is its legal adviser

Morgan Stanley & Co. LLC is SGA's financial adviser and Davis Polk & Wardwell LLP provided legal counsel. (Reporting by Aishwarya Venugopal in Bengaluru; Editing by Anil D'Silva)

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