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December 14, 2013

U.S. Foods merger may spoil plans for Seabrook

SEABROOK — Stock shares for food distribution giant Sysco Corp. jumped up significantly on Monday when news got out it would buy its major competitor U.S. Foods, but many in Seabrook believe the merger has doomed the deal for U.S.Foods expansion to town.

According to the Associated Press, Sysco stock rose the most in the Standard & Poor’s 500 index after its Dec. 9 announcement of its agreement to buy rival US Foods in an $8.2 billion deal. Sysco’s stock jumped $3.31, or 9.7 percent, to $37.62.

But when Seabrook Town Manager Bill Manzi read the news in the Wall Street Journal, his hopes crumbled for U.S. Food’s $62-million proposed expansion project from its Peabody site to the 88-acre half-million square foot Poland Springs warehouse in Seabrook’s industrial park, that would have brought hundreds of existing, plus about 100 new jobs to town.

After speaking with U.S. Foods Corporate Real Estate Director Jeffrey Barnes, Manzi said he got the impression the move to Seabrook was probably not going to happen. Barnes was coordinating the company’s purchase of the Poland Springs building and the Seabrook expansion. Manzi believes none of those involved in the Seabrook move knew anything about the merger.

“In a merger like this everything is frozen and I don’t want to say definitively that the deal is off, but as we speak the deal is suspended,” Manzi said. “As of this point, they won’t be continuing with the process to relocate here.”

According to Sysco’s announcement on its website, Sysco Corporation and U.S. Foods have an agreement to merge for a total transaction value of about $8.2 billion. The venture has been approved by the boards of directors for each company.

Sysco will pay $3.5 billion for U.S. Foods to its private equity owners in $3 billion of Sysco common stock and $500 million of cash. Sysco will assume or refinance US Foods’ debt of about $4.7 billion, bringing the value to $8.2 billion, according to the Sysco release.

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