Sysco goes all in on the 'cash and carry' food-service business with a $29 billion buyout

By Tomi Kilgore

Sysco's stock sinks as the food service giant enters the growing market of smaller restaurants and grocers looking for lower prices with a cash-and-stock buyout deal

Sysco's stock tumbles after announcing a $29.1 billion cash-and-stock deal to buy Jetro Restaurant Depot.

Shares of Sysco were having their worst day in six years after the announcement of a massive deal to buy privately held Jetro Restaurant Depot, as the food-service giant looks to enter the more profitable and growing "cash and carry" business.

The deal, which has an enterprise value of $29.1 billion, allows Sysco (SYY) to serve smaller, self-service restaurant and grocery clients; those that shop at wholesale warehouses for their own products; those that pay in full as they leave; and those that carry the items out themselves. That's opposed to Sysco's higher volume, but lower margin, "white glove" service to larger clients that pay for delivery.

The announcement comes as delivery costs are rising and the number of clients seeking the lower-priced "cash and carry" option is growing. Sysco estimates it to be a $60 billion to $70 billion addressable market.

Sysco is paying a little less than half the size of the market to get into that business. The deal comes a little more than 10 years after Sysco's attempt to purchase rival US Foods for $8.2 billion, which failed due to regulatory scrutiny.

Under the terms of the deal, Jetro shareholders will receive $21.6 billion in cash and 91.5 million Sysco shares, or about 19.1% of the shares outstanding, which, as of Friday's closing price, would be valued at about $7.5 billion.

Sysco's stock tumbled 15.3% to close at an 11-month low, enough to lead the S&P 500 index's SPX decliners. The stock suffered its biggest one-day drop since it sank 19.8% on March 16, 2020.

Investors tend to dislike large merger deals that include stock, because the number of shares outstanding increases, which dilutes current shareholders' ownership of the company.

Sysco expects the acquisition of Jetro to start adding to earnings in the first year after closing, which is expected to occur by the quarter that ends March 2027. Jetro operates 166 warehouses across 35 states.

Sysco affirmed its fiscal 2026 guidance for adjusted earnings per share of $4.50 to $4.60. Full quarterly results are slated to be revealed on April 28.

Sysco's stock has lost 6% so far in 2026, while the S&P 500 has declined 7.3%.

-Tomi Kilgore

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03-30-26 1638ET