Piper Sandler Downplays Sysco Corporation (SYY)’s $29.1B Deal for Restaurant Depot

Sysco Corporation (NYSE:SYY) is one of the top consumer defensive stocks to buy now. On April 7, Piper Sandler reiterated a Neutral rating on Sysco Corporation (NYSE:SYY) but cut the price target to $77 from $83. The price target cut comes on the heels of the company announcing a $29.1 billion deal to acquire Restaurant Depot in a transaction the research firm is not a fan of.

Piper Sandler Downplays Sysco Corporation (SYY)’s $29.1B Deal for Restaurant Depot

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Under the terms of the agreement, Restaurant Depot shareholders are to receive $21.6 billion in cash proceeds and $91.5 million in Sysco shares. Sysco plans to finance the transaction with $21 billion in new and hybrid debt and $1 billion in cash and equity.

The acquisition is poised to expand Sysco’s footprint into the $60- $70 billion Cash and Carry Channel segment of the $380 billion US foodservice market. Sysco expects the transaction to be mid- to high-single-digit EPS accretive in year one and low to mid-teens accretive in year two. In addition, Restaurant Depot is to operate as a separate business segment within Sysco once the acquisition closes.

Sysco Corporation (NYSE:SYY) is the global leader in the sale, marketing, and distribution of food products and non-food supplies to restaurants, healthcare/educational facilities, and hospitality businesses. It operates over 300 distribution facilities worldwide, providing comprehensive supply chain solutions.

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