Exhibit 99.1
SYSCO Corporation NEWS RELEASE
1390 Enclave Parkway ------------
Houston, Texas 77077-2099
(281) 584-1390
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION
CONTACT:
Diane Day Sanders Stewart H. Mahoney, CFA
Vice President and Treasurer Vice President, Investor Relations
SYSCO Corporation Sobeys Inc.
281-584-1303 902-928-1725
SYSCO TO ACQUIRE SERCA FOODSERVICE OPERATIONS AND ANNOUNCES
AGREEMENT TO FORM A NEW STRATEGIC ALLIANCE WITH SOBEYS INC.
Houston, December 5, 2001 -- SYSCO Corporation (NYSE: SYY), North America's
largest foodservice marketer and distributor, has signed a definitive agreement
to purchase for CAD$440 million cash (US$278 million) substantially all of the
assets of the SERCA Foodservice operations of Sobeys Inc. (TSE: SBY) and assume
the liabilities associated with the purchased assets. The transaction, which is
expected to be completed early in calendar year 2002, is subject to SYSCO's due
diligence and is also conditioned upon the receipt of customary Canadian
regulatory approvals, including consent from the Competition Bureau.
The companies also announced their agreement to form a strategic alliance
to optimize the sourcing and procuring of produce and corporate brand products.
The association between SYSCO and Sobeys is intended to increase efficiency of
their respective logistics and distribution systems, and the companies will
develop new concepts together to satisfy the changing requirements of their
respective customers.
SERCA, headquartered in Toronto, Ontario, is one of the largest operators
in the North American foodservice industry. The company supplies about 100,000
food products, as well as foodservice supplies and equipment, to approximately
80,000 customers, including restaurants, hotels, fast food chains, educational
facilities and health care locations. SERCA operates throughout Canada and is
supported by approximately 4,000 employees and a fleet of 500 delivery vehicles.
The company was acquired by Sobeys in December 1998 as part of Sobeys
acquisition of The Oshawa Group Limited. For its fiscal year 2001 that ended May
5, 2001 SERCA generated sales of CAD$2.21 billion (US$1.44 billion).
Commenting on the proposed purchase, Richard J. Schnieders, president and
chief operating officer of SYSCO, stated, "We look forward to welcoming SERCA to
the SYSCO family. SERCA's strengths are very complementary to ours, including
their commitment to high standards for customer service and product excellence.
The addition of SERCA to the SYSCO family should enhance SYSCO's position as the
leading foodservice distribution company in North America. It is a net gain for
all parties."
Currently, SYSCO has nine distribution locations in Canada including five
broadline companies, three specialty produce operations and one hotel supply
company.
- more -
Bill McEwan, president and chief executive officer of Sobeys Inc., noted
that the transaction will create significant value for Sobeys' and SYSCO's
customers, shareholders and employees. "Sobeys can now focus its full attention
and resources on growing its core retail business, with a strengthened financial
position and a strategic association with North America's largest and best
foodservice operator," Mr. McEwan said.
Charles H. Cotros, chairman and chief executive officer of SYSCO, said,
"The addition of SERCA will solidify our position across Canada and provide
substantial procurement and other benefits to our new and existing customers and
suppliers. This purchase will enhance our distribution synergies in the
approximately CAD$14 billion (US$9 billion) Canadian foodservice distribution
market."
"In spite of the current economic downturn and the events related to the
September 11th tragedies, SYSCO's sales and earnings growth increased for an
unprecedented 102nd consecutive quarter in our first quarter of fiscal 2002.
This record, coupled with our recent quarterly dividend increase of 28.6 percent
- -- the 33rd dividend increase in SYSCO's 31-year history as a public company --
demonstrates to shareholders our confidence in SYSCO's future and the
opportunities in the North American foodservice industry."
JPMorgan Securities, Inc. served as financial advisor to SYSCO in
connection with the acquisition.
SYSCO is the largest foodservice marketing and distribution organization in
North America. Generating sales of $21.8 billion for the fiscal year 2001 that
ended June 30, 2001, the company provides food and related products and services
to about 370,000 customers, including restaurants, healthcare and educational
institutions, lodging establishments and other foodservice operations. The SYSCO
distribution network currently extends throughout the entire contiguous United
States and portions of Alaska, Hawaii and Canada. For more information about
SYSCO visit the company's home page at www.sysco.com.
Headquartered in Stellarton, Nova Scotia, Sobeys Inc. is Canada's second
largest retail grocer and distributor. Sobeys operates over 1,300 corporate and
franchise stores in all 10 provinces under a range of retail banners, including
Sobeys, Garden Market IGA, IGA extra and Price Chopper. Sobeys is committed to
satisfying its customers' current demands for products and services, and
exceeding their expectations with value-added offerings in the future. The
company achieved overall sales of CAD$11.37 billion for its fiscal year ended
May 5, 2001. More information on Sobeys can be found at www.sobeys.com.
Advisory of Media and Analyst Briefing
Rick Schnieders and Bill McEwan will be available to answer questions
surrounding this transaction at a media briefing held at the Sheraton Centre at
123 Queen Street West, Conference Room F, Second Floor, in Toronto, at 10:00
a.m. (EST) on Wednesday, December 5, 2001. A live webcast is also available and
can be accessed at www.sysco.com and www.sobeys.com.
Certain statements made herein are forward-looking statements under the Private
Securities Litigation Reform Act of 1995. They include statements regarding
expected benefits of the SERCA acquisition and proposed strategic alliance with
Sobeys. These statements are based on management's current expectations and
estimates; actual results may differ materially due to certain risks and
uncertainties. For example, SYSCO's ability to achieve expected results may be
affected by competitive price pressures, availability of supplies, work
stoppages, failure of SYSCO to successfully integrate SERCA's operations,
failure of the transaction to close due to the inability to obtain regulatory or
other approvals, failure of the combined company to retain key executives and
other personnel, conditions in the economy, including the current economic
downturn, industry growth and internal factors, such as the ability to control
expenses. For a discussion of additional factors affecting SYSCO, see SYSCO's
Annual Report on Form 10-K for the fiscal year ended June 30, 2001, as filed
with the Securities and Exchange Commission.
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