SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
____________________
U.S. FOODSERVICE
(Name of Subject Company)
U.S. FOODSERVICE
(Name of Person(s) Filing Statement)
Common Stock, Par Value $0.01 Per Share
(Including the Associated Rights)
(Title of Class of Securities)
90331R101
(CUSIP Number of Class of Securities)
____________________
David M. Abramson, Esq.
U.S. Foodservice
9755 Patuxent Woods Drive
Columbia, Maryland 21046
(410) 312-7100
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
Copy to:
John G. Finley, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
(212) 455-2000
[x] Check the box if the following relates solely to preliminary
communications made before the commencement of a tender offer
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For More Information Contact:
Robert Gillison Treasurer/Investor Relations
410-312-7512
News Organizations Contact:
Vice President Marketing & Public Relations
Bonna Walker
410-312-7520
U.S. FOODSERVICE BOARD OF DIRECTORS APPROVES
$3.6 BILLION CASH TENDER OFFER BY ROYAL AHOLD
$26 per share purchase price
Day-to-day operations proceed as usual
COLUMBIA, MD (March 7, 2000) -- U.S. Foodservice (NYSE:UFS) announced
today that its board of directors has approved a cash tender offer by
Royal Ahold (NYSE: AHO) the international food provider based in the
Netherlands, for $26 per share or approximately $3.6 billion including
debt.
Royal Ahold will commence a cash tender offer to purchase all of the
outstanding common shares on March 13, 2000. The tender offer will
remain open for 20 business days, unless extended in accordance with the
merger agreement, and is conditioned on the tender of a sufficient number
of shares to give Royal Ahold ownership of at least a majority of the
outstanding shares on a fully diluted basis. Shares not purchased
pursuant to the tender offer will be converted into the right to receive
the same $26 per share in cash in a subsequent merger. The tender offer
will also be subject to other customary closing conditions, including the
need to obtain antitrust approvals.
"We view this transaction as presenting an excellent opportunity that is
in the best interests of U.S. Foodservice shareholders. Moreover, our
customers and employees will also be well served by this transaction,"
said Jim Miller, chairman and CEO of U.S. Foodservice.
"This is a great opportunity and provides us with significant additional
growth," said Royal Ahold President Cees van der Hoeven. "U.S.
Foodservice has enormous potential as it has a solid infrastructure in
place and management professionals at the helm. Critical mass and
economies of scale along with new synergies will positively impact all
our businesses. This new acquisition makes Royal Ahold a multi-channel
food provider. We're excited and see a very positive future ahead."
For U.S. Foodservice, Mr. Miller stated that, "Teaming with Ahold gives
U.S. Foodservice increased access to capital to accelerate its already
rapid growth and take full advantage of its current momentum. The
economies of scale now available and the sharing of know-how and
experience will greatly help us to enhance the experience of the combined
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company's customer base, increase its access to global markets, and take
advantage of the huge potential of the food service market."
With respect to the reasons of Royal Ahold for this transaction,
management at both companies pointed to innovation between the retail and
institutional food service operations that will allow the combined entity
to better serve both retail and food service customers. In addition,
substantial cost savings will be achieved due to increased leverage with
the combined company's shared supplier base as well as economies of scale
in finance and administration. Other opportunities exist in such diverse
areas as e-commerce, information systems and international expansion.
Day-to-day operations of U.S. Foodservice will not change despite the
change in ownership. The company's current leadership team will remain
intact with Jim Miller continuing in his role as President and CEO of
U.S. Foodservice, reporting directly to Bob Tobin, President and CEO of
Ahold USA. U.S. Foodservice's national headquarters will remain in
Columbia, Maryland and its name will not change.
According to Miller, "U.S. Foodservice anticipates no layoffs in
operating branches arising from this transaction and very minimal impact
in its corporate office. In fact, U.S. Foodservice expects to add jobs in
the long run based on expected future growth and Royal Ahold's past
acquisition experience."
Synergies in E-commerce
U.S. Foodservice launched a large-scale e-commerce initiative last
November. Through a new business-to-business website,
nextdaygourmet.com, customers can order kitchen equipment, restaurant
supplies and a large variety of specialty food items. Sales of these
items already generate revenue of approximately $530 million annually and
are growing fast. The ongoing effort to move sales to the internet will
enhance both profitability and customer service.
Royal Ahold recently announced its intention to step-up its investments
in e-commerce, both business-to-business and business-to-customer. The
company generated on-line sales of $61 million in 1999 and expects to see
that figure double every year for the coming three years.
Financial Details
The planned transaction to acquire all outstanding shares of U.S.
Foodservice amounts to $3.6 billion, including debt approaching $925
million. In line with past practice, Ahold intends to finance the
transaction through 50% equity and 50% debt. Royal Ahold plans to issue
new shares that would also take into account proportional financing of
its stakes in the ICA operation announced in December 1999 and
transactions in Spain and Central America.
Upon completion of the U.S. Foodservice acquisition expected in the
second quarter 2000, Ahold's annualized U.S. sales will total
approximately $30 billion. Synergies and cost savings from the
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acquisition of U.S. Foodservice are expected to amount to at least $75
million by 2001.
U.S. Foodservice sales are expected to continue to grow at a double digit
pace. The company will continue its strategy of supplementing internal
growth with strategic and accretive acquisitions.
About Royal Ahold
Royal Ahold operates 4,000 supermarkets, hypermarkets, and other store
formats in the United States, Europe, Latin America and Asia. In 1999,
sales were $35 billion.
Royal Ahold services the food needs of over 25 million people every week.
Ahold intends to become the 50 percent owner of ICA, Scandinavia's
leading food provider, which will add 4,600 stores and $7 billion in
annual revenues and rank Royal Ahold among Europe's major players in the
food industry.
Royal Ahold is very familiar with the food service sector and
successfully operates in this segment through its wholly owned Dutch
subsidiary Deli XL. Deli XL services 30,000 customers in the Netherlands
with 1999 sales of $800 million.
Ahold in the U.S.
Royal Ahold has been active in the U.S. since 1977 and currently owns
five large and highly successful supermarket operating companies along
the eastern seaboard. The combined store count is 1,063 and 1999 sales
amounted to approximately $20.3 billion. The five Ahold operating
companies are: Tops Markets, Stop & Shop, Giant Food Inc./Giant Food
Stores and BI-LO.
About U.S. Foodservice
U.S. Foodservice is one of the largest broadline foodservice distributors
in the United States distributing food and related products to
restaurants and institutional foodservice establishments across the
continental United States. U.S. Foodservice markets and distributes more
than 43,000 national, private label and signature brand items to over
143,000 food service customers, including restaurants, hotels, healthcare
facilities, cafeterias and schools, and employs more than 13,250 food
service professionals. U.S. Foodservice's diverse customer base
encompasses independent and chain businesses as well as consumers through
its e-commerce website www.nextdaygourmet.com.
The statements in this press release concerning management's expectations
regarding the financial condition, results of operations and businesses
of U.S. Foodservice and Royal Ahold and, assuming consummation of the
transaction, the combined company may constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934, including
statements relating to the synergies and cost savings expected to be
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realized from the transaction, the anticipated impact on revenues and the
expect financing of the transaction. These statements are subject to
risks and uncertainties that could cause actual operating results of the
U.S. Foodservice and Royal Ahold and, upon consummation of the
transaction, the combined company, to differ materially. Such risks and
uncertainties include the expected cost savings from the transaction
cannot be fully realized or realized within the expected time frame;
revenues following the transaction are lower than expected or operating
costs or customers loss and business disruption following the transaction
may be greater than expected; costs or difficulties relating to the
integration of the businesses of U.S. Foodservice and Royal Ahold are
greater than expected; the sensitivity of the U.S. Foodservice and Royal
Ahold and assuming consummation of the transaction of the combined
companies business to national and regional economic conditions; the
effects of inflation and deflation in food prices, the highly competitive
markets in which the Company operates; difficulties, delays or higher
expenses associated with achieving expected costs savings and realize
operating synergies in integrating acquired businesses; and the inability
to complete additional acquisitions. U.S. Foodservices' Annual Report on
Form 10-K for the fiscal year ended July 3, 1999 filed with the
Securities and Exchange Commission by U.S. Foodservice discusses some of
the important factors that could cause actual results to differ
materially from those in such forward-looking statements.
The tender offer described in this announcement for the outstanding
shares of common stock of U.S. Foodservice has not yet commenced, and
this announcement is neither an offer to purchase nor a solicitation of
an offer to sell securities. The tender offer will be made only through
the Offer to Purchase and the related Letter of Transmittal. We urge U.S.
Foodservice stockholders to read the following documents, when they
become available, regarding the tender offer and merger because they will
contain important information:
- - Royal Ahold's Tender Offer Statement on Schedule TO, including the
Offer to Purchase, Letter of Transmittal and Notice of Guaranteed
Delivery;
- - U.S. Foodservice's Solicitation/Recommendation Statement on
Schedule 14D-9.
These documents and amendments to these documents will be filed with the
United States Securities and Exchange Commission when the tender offer
commences. When these and other documents are filed with the SEC, they
may be obtained free of charge at the SEC's web site at www.sec.gov.
U.S. Foodservice stockholders may also obtain for free each of these
documents (when available) from the Information Agent, Morrow & Co., Inc.
(U.S. Foodservice stockholders please call 1-800-566-9061).
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