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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported).........February 5, 1996
RYKOFF-SEXTON, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-8105 95-2134693
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
1050 Warrenville Road
Lisle, Illinois 50532-5201
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(Address of principal executive offices)
Registrant's telephone number, including area code ..... (708) 964-1414
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Rykoff-Sexton, Inc. announced today that it has executed a definitive
merger agreement with US Foodservice Inc. pursuant to which US Foodservice
Inc. will merge with and into a wholly owned subsidiary of Rykoff-Sexton,
Inc., all as set forth more fully in the press releases filed as exhibits
herewith.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 5, 1996 RYKOFF-SEXTON, INC.
By /s/ Richard J. Martin
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Its Senior Vice President and Chief
Financial Officer
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EXHIBIT INDEX
99.1 Press Release
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RYKOFF-SEXTON NEWS RELEASE
Contact: Richard J. Martin Roger S. Pondel
Rykoff-Sexton, Inc. Pondel Parsons & Wilkinson
(708) 971-6598 (310) 207-9300
FOR IMMEDIATE RELEASE
RYKOFF-SEXTON AND US FOODSERVICE EXECUTE
DEFINITIVE MERGER AGREEMENT
Lisle, Illinois - February 5, 1996 - Rykoff-Sexton, Inc. (NYSE:RYK) and
US Foodservice Inc., based in Wilkes-Barre, Pennsylvania, jointly announced
today that they have signed a definitive merger agreement. The transaction
will result in the combination of the third and fourth largest US broadline
foodservice distributors with combined annual sales of approximately $3.5
billion.
The merger, which has been unanimously approved by the boards of
directors of both companies, is valued at approximately $230 million,
exclusive of amounts to be paid to preferred stockholders of US Foodservice
and debt of US Foodservice to be refinanced in the transaction. The merger is
expected to close in the second calendar quarter of 1996.
As previously announced, upon consummation of the merger, each share of
US Foodservice Common Stock would be exchanged for $25 in value of
Rykoff-Sexton Common Stock, subject to a maximum of 1.457 and a minimum of
1.244 shares, based on a dollar range of $17.16 to $20.10, of Rykoff-Sexton
Common Stock. A maximum of
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approximately 12.9 million and a minimum of approximately 11.0 million shares
of Rykoff-Sexton Common Stock would be issued in the transaction.
Rykoff-Sexton currently has approximately 14.8 million shares of Common Stock
outstanding. Options and warrants to acquire approximately 1 million shares
of US Foodservice will be converted into options and warrants to acquire
Rykoff-Sexton Common Stock according to the merger conversion terms.
Outstanding preferred stock of US Foodservice is expected to be redeemed for
approximately $48.6 million in cash.
"US Foodservice has demonstrated the management strength that is
necessary to run a large, growing broadline food distribution business and to
successfully complete and integrate a number of significant acquisitions,"
Mark Van Stekelenburg, chairman and chief executive officer of Rykoff-Sexton,
said. "US Foodservice has a strong presence in several important geographic
markets in the United States, with 17 distribution centers. Rykoff-Sexton's
and US Foodservice's business are highly complementary and will be combined
as a unified, national organization as a result of the transaction."
Van Stekelenburg said that, based upon preliminary estimates, he expects
over the next three years, the combined operations will achieve annual cost
savings from synergies in excess of approximately $30 million. "In addition
to providing for expansion of our geographic markets, we expect that the
proposed merger will significantly enhance purchasing power, provide growth
opportunities for the Rykoff-Sexton manufacturing operations, and enable us
to further penetrate key markets with the distribution of the Rykoff-Sexton
proprietary branded products. While we expect that during the first year
there will be some dilution to earnings as a result of the merger, we are
confident that the
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benefits going forward are significant and will enable us to meet our goal of
enhancing shareholder value."
Frank Bevevino, chairman and chief executive officer of US Foodservice,
said, "US Foodservice management and all of our people are very excited about
this transaction. We are confident that the integration of these two
organizations will provide operating, purchasing and service efficiencies and
make the combined company a significant force in foodservice distribution."
Rykoff-Sexton has obtained bank commitments totaling approximately $485
million to facilitate the refinancing of Rykoff-Sexton's existing bank debt
and other indebtedness incurred in connection with acquisitions completed by
Rykoff-Sexton within the last 12 months, the refinancing of substantially all
the debt of US Foodservice (expected to total approximately $245 million,
exclusive of US Foodservice's existing trade receivables securitization
facility of approximately $90 million), the redemption of the US Foodservice
Preferred Stock, and to provide working capital for the combined companies.
Rykoff-Sexton also intends to enter into a new trade receivables
securitization facility.
In the transaction, US Foodservice will become a wholly-owned subsidiary
of Rykoff-Sexton. The proposed merger is subject to the approvals of
shareholders of both Rykoff-Sexton and US Foodservice, and appropriate
regulatory reviews and approvals. The consummation of the transaction is also
subject to the execution of definitive documentation relating to the
refinancing of the existing debt of the combined companies.
The largest shareholders of US Foodservice consist primarily of investment
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partnerships managed by Merrill Lynch Capital Partners, Inc. or certain of
its affiliates. It is expected that, following the transaction, such entities
will own a substantial portion of Rykoff-Sexton Common Stock and will have
board representation.
Following the transaction, Frank H. Bevevino will become president and a
director of Rykoff-Sexton, Inc. He will also be the chief executive officer
of US Foodservice, a wholly owned subsidiary of Rykoff-Sexton, Inc. In this
capacity he will be responsible for all foodservice distribution operations
of the combined companies. Mark Van Stekelenburg presently chairman,
president and chief executive officer of Rykoff-Sexton, will be chairman and
chief executive officer of Rykoff-Sexton.
US Foodservice had net sales for its fiscal year ended December 31, 1995
of approximately $1.7 billion and is a distributor of food and related
non-food products to the foodservice industry, serving more than 35,000
customers in over 30 states, primarily in the Southeastern, Southwestern and
Mid-Atlantic regions.
For the year ended April 30, 1995, Rykoff-Sexton reported net sales of
$1.6 billion. For the twelve months ended December 31, 1995, Rykoff-Sexton
had net sales of approximately $1.7 billion. The company has distribution
centers, sales offices, contract design facilities and manufacturing,
processing and packaging operations throughout the United States.
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