US Foods Inc. Outlook Revised To Negative On Acquisition Of Services Group Of America Subsidiaries, 'BB+' ICR Affirmed

Foodservice distributor US Foods Inc. (USF) has agreed to acquire five subsidiaries of Services Group of America (SGA Food) for $1.8 billion. USF expects to finance the transaction with the proceeds from a $1.5 billion committed term loan and its existing liquidity sources. We estimate that the transaction will increase USF's pro forma leverage to the high-4x area from the high-3x area as of March 31, 2018. We believe the U.S.-based company will remain committed to deleveraging after the transaction closes and forecast that its leverage will return to the high-3x area in 18-24 months following the close of the acquisition. We are revising our outlook on USF to negative from stable and are affirming our 'BB+' issuer credit rating

...+ Foodservice distributor US Foods Inc. (USF) has agreed to acquire five subsidiaries of Services Group of America (SGA Food) for $1.8 billion. USF expects to finance the transaction with the proceeds from a $1.5 billion committed term loan and its existing liquidity sources. + We estimate that the transaction will increase USF's pro forma leverage to the high-4x area from the high-3x area as of March 31, 2018. We believe the U.S.-based company will remain committed to deleveraging after the transaction closes and forecast that its leverage will return to the high-3x area in 18-24 months following the close of the acquisition. + We are revising our outlook on USF to negative from stable and are affirming our '##+' issuer credit rating on the company. Our '###-' issue-level rating on its $1.3 billion asset-based lending (ABL) revolving credit facility is unchanged. + At the same time, we are placing our '###-' issue-level rating on the company's $2.2 billion senior secured term loan B and...

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