This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

TheStreet's Top 5 Dealmakers Heading into 2014

Sysco's Acquisition of U.S. Foods

Foods distributor Sysco (SYY) could be the Constellation Brands of 2014. The company appears to have cut an opportunistic acquisition of competitor U.S. Foods, owned by private equity firms Clayton, Dubilier & Rice and KKR after a $7.1 billion leveraged buyout in 2007. Like Crown Imports, U.S. Foods may be an asset that went to the auction block with a hurried seller and few likely buyers. The acquisition also is likely to face significant regulatory review.

In the case of Sysco and U.S. Foods, a merger would combine the top two foods distributors in the U.S. While that might raise the ire of some antitrust regulators, the industry may be under the competitive and cost pressures that allow a deal to squeak through, albeit with some give and take on divestitures.

But if a deal is consummated in 2014, as management expects, it could help Sysco recover from chronic declines to the company's profit margins. That may help to turn around a company that has underperformed broader markets in recent years.

KKR and CDR are also betting on Sysco's turnaround, taking the majority of their U.S. Foods sale in the form of Sysco stock, a rare move for private equity sellers who usually deal in cash.

Sysco shares are up 15% year-to-date, underperforming the S&P 500. Most of the company's 2013 gains are attributable to investors' reaction to the company's December announcement of the deal for U.S. Foods.

-- Written by Antoine Gara in New York

Follow @antoinegara

5 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs