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Cargill Incorporated

Sysco to buy US Foods from private equity, shares leap

Sysco Corp will buy US Foods Inc for about $3.5 billion from its private equity owners in a deal that will combine the top two U.S. food distributors and create a company commanding at least a quarter of the $235 billion North American market.Sysco, whose shares jumped as much as 25 percent to a record high on Monday, touted the combination of its supply chain expertise with the strong consumer-facing technologies of US Foods as a key driver for the deal, which creates a company with revenue of $65 billion."The purchase price seems fairly reasonable. It is less than 10 times trailing 12-month EBITDA, and there are synergies that are expected to result from the deal," said Morningstar analyst Erin Lash told Reuters.United Natural Foods Inc , the next largest publicly listed food distributor, trades at about 14 times trailing EBITDA.Sysco, which will assume US Foods' debt of $4.7 billion, said it expected about $600 million in annual cost savings within three to four years.Both companies...

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  1. Mosaic To Buy Back 43.3 Million Shares

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