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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.

Nejron Photo/Shutterstock.com

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.

While we acknowledge the risk and potential of SYY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SYY and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 10 Undervalued Large Cap Stocks to Buy and 9 Best Gold Mining Companies to Buy With High Upside Potential.

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