Sysco Buys Lincoln Poultry
by Zacks Equity ResearchJuly 16, 2010 | Comments : 0 Recommended this article: (0)
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Sysco Corp. ( SYY - Snapshot Report ) , a global leader in selling, marketing and distributing food products, has acquired Lincoln Poultry & Egg Co., one of the leading foodservice distributors. The financial terms for the acquisition were not disclosed.
Since the acquisition is already in effect, management and employees of Lincoln Poultry have joined the payroll of Sysco. As a part of the deal, Sysco will expand Lincoln’s facilities at 800 Cattail Road and cannot lay off employees of Lincoln Poultry.
Lincoln Poultry, which has approximately $200 million of annualized revenues, is not likely to have any significant financial impact on Sysco, which has annualized sales of $36 billion. However, Sysco is optimistic about Lincoln Poultry's diversified line of products and services, which is not justified by its name. Established in 1957, Lincoln Poultry distributes frozen and refrigerated foods, dry groceries, and an array of equipment and serves more than 800 customers primarily located throughout the central United States.
Sysco has completed more than 150 acquisitions in its 40 years of establishment. The company prudently uses its capital, thereby leveraging its fixed-cost, which is essential in the capital-intensive, low-margin food-service distribution industry. Given that approximately 75% of the U.S. food-service distribution market is fragmented, we believe there exist further opportunities to acquire the beleaguered companies hurt by the recent economic downturn.
Headquartered in Houston, Texas, Sysco offers its products to restaurants, hospitals and nursing homes, schools and colleges, hotels and motels, lodging establishments, and industrial caterers. The company also supplies various non-food items, including paper products, such as disposable napkins, plates, and cups; tableware comprising china and silverware; cookware consisting of pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. Sysco operates through 186 distribution facilities serving approximately 400,000 customers.
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