U.S. Foodservice Inc. said yesterday that it has completed its acquisition of Sofco Inc., a paper-product distributor in Albany, N.Y.
Columbia-based U.S. Foodservice hopes to increase its sales of paper products -- such as napkins, towels and tablecloths -- and the purpose of the purchase is to get a foot in the door.
"Ninety percent of Sofco's revenue comes from companies who we'd like to sell food to: hospitals, schools, restaurants, sports stadiums, prisons and hotels," said U.S. Foodservice's treasurer, Robert Gillison. "That's why we're doing it."
The purchase price was not disclosed.
Sofco, a wholly owned subsidiary of Corporate Express Inc. of Broomfield, Colo., serves the Albany, Buffalo and Rochester markets in New York, areas where U.S. Foodservice does not have a strong presence.
"It's a great entree into that market. We're currently doing business in Buffalo, but not in Albany at all," Gillison said. "This is a geographic expansion and a product expansion. Sofco is a profitable business and it has been growing."
Sofco had about $160 million in sales for the fiscal year that ended Jan. 30, about 3 percent of U.S. Foodservice's $5.5 billion in sales last year.
"The good thing about [the acquisition] is that what U.S. Foodservice wants to do is service everybody in the U.S. with everything they need inside restaurants -- soup to nuts and everything they're served on -- and what this company does is provide a fairly strong geographic region in the Northeast," said Mark Husson, an analyst at Merrill Lynch Global Securities in New York. "It absolutely makes sense."
In announcing the sale, Corporate Express Chief Executive Officer and President Robert King said his company's decision to sell "was the result of our goal to focus on operations with the highest strategic fit, greatest potential for sustained, profitable growth and the ability to increase our return on invested capital."
Gillison said, "Let's just say what may not be attractive to those guys doesn't necessarily mean it isn't attractive to us. They believe it is not a part of their core business."
He said no layoffs are expected as a result of the acquisition.
U.S. Foodservice also announced yesterday that it will change its ticker symbol on the New York Stock Exchange from UFS to USF on July 19. The USF symbol once used by U.S. Filter Corp. recently became available, and a spokeswoman said the new letters will be easier to remember.
Shares of U.S. Foodservice closed at $41.625 yesterday, down $1.375.
Pub Date: 7/07/99