KKR Provides Convertible Preferred to US Foods

KKR has agreed to purchase $500 million in convertible preferred stock of US Foods.

The newly issued security 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, and is convertible into common stock at $21.50 per share which is approximately 9.6% of pro forma common shares outstanding.

US Foods (NYSE: USFD) is a foodservice distribution company serving more than 300,000 restaurants and foodservice operators. In fiscal 2019 the company had $25.9 billion in revenue and $1.0 billion in EBITDA. The company is headquartered near Chicago in Rosemont, Illinois and has more than 28,000 employees at 70 locations.

KKR and Clayton, Dubilier & Rice acquired US Foods in 2007 for $7.1 billion from Dutch retailer Royal Ahold. The two firms took the company public in 2016 and exited their investment in 2017.

“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.”

“We are excited to once again partner with the strong management team at US Foods,” said Nate Taylor, a partner and co-head of Americas private equity at KKR. “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 (NYSE: KKR) makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East. KKR was founded in 1976 and in addition to its New York headquarters has offices in 19 cities around the world.

KKR is funding its investment in US Foods through its KKR Americas XII Fund which closed in March 2017 with $13.9 billion of capital.

Centerview Partners and Evercore were the financial advisors to US Foods on this transaction.

Private Equity Professional | April 22, 2020

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