Performance Food Group Co. and Core-Mark Holding Co. Inc. have entered into a definitive agreement in which PFG will acquire Core-Mark in a stock and cash transaction.
Under the terms of the transaction, which has been unanimously approved by the board of directors of each company, Core-Mark shareholders will receive $23.875 per share in cash and 0.44 PFG shares for each Core-Mark share. The transaction values Core-Mark at approximately $2.5 billion, including its net debt.
Upon closing of the transaction, Core-Mark shareholders will own approximately 13 percent of the combined company. The company expects to continue paying its current quarterly dividend through the completion of the transaction.
The transaction will create a best-in-class convenience business within PFG’s Vistar segment that will include the Core-Mark and Eby-Brown businesses. The expanded convenience business will operate under the Core-Mark brand and will be headquartered in Westlake, Texas with Eby-Brown maintaining ongoing operations in Naperville, Illinois. Scott McPherson will continue in his role as president and CEO of Core-Mark, following closing of the transaction. Tom Wake will continue as president and CEO of Eby-Brown, reporting to McPherson.
“We are excited to announce the strategic acquisition of Core-Mark and welcome the organization to Performance Food Group,” said George Holm, PFG chairman, president and CEO. “Core-Mark is an outstanding company that we believe will significantly strengthen our business diversification and expansion into the convenience store channel. Core-Mark brings a highly skilled and experienced workforce along with an experienced senior leadership team, which will be valuable additions to the PFG family of companies. This transaction will also combine Core-Mark’s footprint and operational excellence with PFG’s existing capabilities in both convenience and foodservice. The deal comes with strong strategic and financial merits which we believe will generate significant customer benefits and help PFG continue to create long term shareholder value. The two organizations have similar cultures, which we expect will facilitate a smooth integration and transition process. We look forward to getting to know the associates at Core-Mark better and building a strong future as one organization.”
“On behalf of PFG’s Vistar segment, I echo George’s enthusiasm for this transaction,” said Patrick Hagerty, EVP of PFG and CEO of Vistar. “Adding convenience store distribution in 2019 built up the core strength of our organization, providing another important avenue for growth. Bringing Core-Mark to PFG will continue this journey and complement our existing portfolio. I look forward to us bringing together the best talent in convenience and welcoming Core-Mark associates at close.”
Core-Mark is one of the largest wholesale distributors to the convenience retail industry in North America with approximately $17 billion in net sales. The company has approximately 7,500 employees and operates 32 distribution centers across the United States and Canada. The company services approximately 40,000 customer locations in all 50 states in the U.S., five Canadian provinces and two Canadian territories.
“This transaction brings together two companies known for their customer-focused approach and dedication to their employees,” McPherson said. “As part of our continuous focus to maximize shareholder value and better serve our customers, our board evaluated the transaction and determined this combination provides our investors immediate value and the opportunity to participate in the upside potential of being part of a larger, diversified and customer-centric supplier in the foodservice and convenience retail industry. The combination of our two highly complementary businesses creates an even stronger platform to drive growth, as we deliver a best-in-class offering to our customers. I’d like to thank the entire Core-Mark team for their hard work and focus in helping us reach this exciting milestone.”
Upon closing of the transaction, at least one current Core-Mark director will be added to the PFG Board of Directors.
The transaction is expected to close in the first half of calendar 2022, subject to U.S. federal antitrust clearance, Core-Mark shareholder approval and other customary closing conditions. The transaction is not subject to PFG shareholder approval.