U.S. Foodservice to buy Florida company

Part of expansion in important market

March 03, 2001|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

U.S. Foodservice has agreed to buy a closely held Florida food distributor in a move that will help increase its market share in the state, company officials said yesterday.

The Columbia subsidiary of Dutch supermarket giant Royal Ahold NV will pay an undisclosed amount, in cash, for Mutual Wholesale Co., said Robert Gillison, vice president and treasurer for U.S. Foodservice.

The Lakeland, Fla., company had roughly $300 million in sales last year, and has more than 4,200 accounts, primarily restaurants, schools, universities and health care institutions.

The merger will be U.S. Foodservice's fourth acquisition since Ahold bought the company in April and is its second in Florida. U.S. Foodservice supplies restaurants and institutions with food and supplies such as pots, pans and paper goods.

U.S. Foodservice, the second-largest food distributor behind Sysco Corp., found Mutual Wholesale attractive because of its broad reach in Florida, with locations in Central and South Florida, and for its long track record of success, Gillison said.

"Florida is clearly one of the premier food service markets in the country, and U.S. Foodservice has been underrepresented there for years," Gillison said.

"But with the recent acquisitions of PYA/Monarch, Parkway and Mutual, we have substantially boosted our presence throughout the state of Florida," he said.

In February, the company purchased Parkway Food Service, a food distributor in Clearwater, Fla., with annual sales of $85 million. And in August, the company paid $1.57 billion for PYA/Monarch, a leading food service distributor in the Southeast.

Ahold projects that U.S. Foodservice, with such customers as Ruby Tuesday and Pizzeria Uno, will have annualized sales of $12 billion this year. It has 55 distribution centers and over 200,000 food service customers.

Analysts said that the fragmented U.S. food services industry is ripe for big players such as U.S. Foodservice and Sysco to seek greater consolidation in the future. Overall distributor food and nonfood sales for 2000 totaled $163 billion, according to a recent report published by ID Magazine, a trade publication of the food service industry.

U.S. Foodservice, the No. 2 player behind Sysco, has about 7 percent of the national market, according to the report.

Ahold, the world's sixth-largest supermarket company, has expanded its holdings beyond supermarkets to try to insulate itself as people spend more and more of their money for prepared food and in restaurants, said Neil Currie, an analyst who covers food services for UBS Warburg in New York.

"They're talking about some cross-over synergies between their supermarket and food service industries," said Currie. "There may well be in time synergies between those businesses."

Shares of Ahold gained 27 cents yesterday to close at $33.07 on the New York Stock Exchange.

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