KKR has agreed to buy $500 million in convertible preferred equity in Rosemont, Illinois-based US Foods, a foodservice distributor. Centerview Partners LLC and Evercore acted as financial advisors to US Foods on the deal while Cravath, Swaine & Moore LLP provided legal advice. And, Simpson Thacher & Bartlett LLP advised KKR.
ROSEMONT, Ill.–(BUSINESS WIRE)–US Foods Holding Corp. (NYSE: USFD) today announced that affiliates of KKR have agreed to purchase $500 million in newly issued convertible preferred stock of US Foods.
“We are pleased to see KKR return as a shareholder of US Foods as we seek to further fortify our balance sheet during the current difficult environment,” said US Foods Chairman and CEO Pietro Satriano. “KKR will be a valuable partner for us as we continue to focus on our associates, customers, communities and shareholders as the impacts of COVID-19 unfold. This transaction positions us to continue to build on our strengths as the environment improves over time.”
Nate Taylor, Partner and Co-Head of Americas Private Equity at KKR said, “We are excited to once again partner with the strong management team at US Foods. Given our history as a long term investor in the company, we are very familiar with the sector and US Foods’ leading position and believe the company has the capabilities and resources to navigate the current environment and create value over the long term.”
KKR’s $500 million convertible preferred stock investment carries a 7% dividend, which will be payable in-kind in its first year and in cash or in-kind, at US Foods’ option, thereafter. The convertible preferred stock will be convertible into shares of US Foods common stock at a conversion price of $21.50 per share. On an as-converted basis, the preferred stock will represent approximately 9.6% of pro forma common shares outstanding. In connection with this transaction, US Foods expects to appoint Nate Taylor as a new director to its Board. KKR is funding the investment primarily through its KKR Americas XII Fund.
US Foods also announced that it expects to close its previously announced acquisition of Smart Foodservice Warehouse Stores on Friday, April 24. Smart Foodservice operates 70 small-format cash and carry stores across California, Washington, Oregon, Idaho, Nevada, Utah and Montana that serve small and mid-sized restaurants and other food business customers with a broad assortment of products.
Centerview Partners LLC and Evercore acted as financial advisors and Cravath, Swaine & Moore LLP acted as legal advisor to US Foods. KKR was advised by Simpson Thacher & Bartlett LLP.
About US Foods
US Foods is one of America’s great food companies and a leading foodservice distributor, partnering with approximately 300,000 restaurants and foodservice operators to help their businesses succeed. With 28,000 associates and more than 70 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, Ill., and generates more than $28 billion in annual revenue. Visit www.usfoods.com to learn more.
KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE:KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.