Performance Food Group (PFGC) announced on Wednesday its definitive agreement to acquire Cheney Brothers, a Florida-based foodservice company, for an impressive $2.1 billion in cash. This strategic move is poised to significantly enhance Performance Food's operational footprint in the Southeastern region of the United States.
The acquisition, which is anticipated to close in the calendar year 2025, remains contingent upon obtaining necessary antitrust approvals. Cheney Brothers boasts a robust annual revenue generation of approximately $3.2 billion, a testament to its successful operations in the competitive foodservice market. In a statement, George Holm, the Chief Executive Officer of Performance Food, articulated the strategic benefits of this acquisition, stating, "This acquisition will expand and enhance our offerings to a high-quality and diverse customer base." Such expansions not only bolster Performance Food’s capabilities but also affirm its commitment to delivering exceptional service across a wider clientele. Following the announcement, Performance Food Group revealed that they expect the transaction to positively impact their adjusted earnings per share by the conclusion of the first complete fiscal year post-acquisition.
The merger will add five crucial distribution centers, stimulating growth opportunities throughout Florida, Georgia, North Carolina, and South Carolina. Byron Russell, the CEO of Cheney Brothers, echoed Holm's sentiments, asserting, "I believe this transaction will bring together two winning organizations and create a significant platform for growth." This partnership is expected to leverage the strengths of both companies to cultivate an even more formidable presence in the foodservice industry. In terms of financial performance, Performance Food Group reported robust fiscal fourth-quarter results for the period ending June 29.
Their revenue surged to $15.19 billion, marking an increase from $14.87 billion a year earlier, though it fell short of the consensus estimate of $15.25 billion as per Capital IQ data. Notably, adjusted earnings per share saw a healthy rise, climbing to $1.45 compared to $1.14 from the previous year, successfully outpacing market expectations which had pegged it at $1.37. The company also highlighted a significant boost in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which rose by approximately 18% to reach $456.2 million. Diving deeper into performance by segment, foodservice sales experienced a solid increase of 4.6% year-on-year, driven by strong case volume growth in both independent operators and chain business segments, contributing $7.65 billion to the overall figures.
Conversely, convenience sales faced challenges, declining by 0.5% to total $6.26 billion, primarily due to decreased sales of cigarette cartons and center store items, though partly offset by rising selling prices. Meanwhile, Vistar's revenue dipped by 1.8% to $1.2 billion, attributable to weaknesses in theater case sales. Looking ahead, for the fiscal first quarter, Performance Food anticipates net sales within the range of $15.2 billion to $15.5 billion, falling slightly below analysts’ expectations of $15.54 billion.
The company is projecting first-quarter adjusted EBITDA between $400 million and $420 million. For the entire fiscal year 2025, projections for net sales stand at $60 billion to $61 billion, compared to the consensus estimate of $60.75 billion. Additionally, the company has estimated full-year adjusted EBITDA in the range of $1.6 billion to $1.7 billion, a notable increase from the previously reported underlying profitability of $1.51 billion for fiscal 2024. As of the latest market assessment, shares of Performance Food Group were priced at $69.00, reflecting a change of +1.92 and a percentage increase of +2.86.
The financial community remains keenly observant of how this acquisition will reshape the competitive landscape in the foodservice sector..