Distribution giant PFG is buying the Southeast's Cheney Bros. for $2.1B

Foodservice distribution giant Performance Food Group (PFG) has inked a deal to buy Cheney Bros., a broadliner with a strong Southeastern U.S. presence, for $2.1 billion in cash.

The deal will add five distribution centers in four Southeastern states to PFG’s network. The buyer described the facilities as state-of-the-art, with excess capacity that affords room for growth.

In addition, PFG cited the opportunity afforded by the acquisition to increase sales of its proprietary brands to independent restaurants in the region. In announcing the deal, the distributor noted that Cheney enjoys strong sales to indies, but with much of it coming from third-party products rather than its own brands. PFG characterized the situation as an opportunity to sell more of its private-label products in the area.

The deal comes as PFG’s closest competitor, US Foods, is also striving to increase sales of its proprietary brands to independents. Private-label goods tend to sport a lower price but better margins than products with big brand names, an attraction for both buyer and seller in the current high-inflation environment.

Richmond, Virginia-based PFG added that Cheney also has deep penetration of the chain, hotel non-commercial markets.

Cheney operates in Florida, Georgia, North Carolina and South Carolina. It is based in Riviera Beach, Florida.

The company’s annual sales currently total about $3.2 billion, according to the announcement of the deal. PFG said the purchase will also bring about $50 million in savings and other “synergies.”

The $2.1 billion purchase price amounts to about a multiple of about 13 times the company’s EBITDA, or earnings before interest, taxation, depreciation and amortization, the buyer said. With the $50 million kicker benefit factored in, the multiple drops to about nine times EBITDA.

The deal is expected to close during 2025, pending anti-trust clearance by federal regulators. Approval by PFG’s shareholders is not required, according to the buyer.

Cheney Bros. is owned by the Cheney family and the investment company Clayton Dubilier & Rice.

“I have watched PFG grow into one of the country’s largest foodservice distributors by fostering new business relationships and maintaining a strong company culture,” Cheney CEO Byron Russell said in a prepared statement.  “I believe this transaction will bring together two winning organizations and create a significant platform for growth.”

The combination of the two concerns marks another step in the distribution sector’s consolidation. All of the Big Three broadliners—Sysco, PFG and US Foods—have been active in increasing their breadth through the purchase of other firms.