Seeking Alpha

A lot to like about Sysco-US Foods combination

  • The outsized rally in Sysco (SYY +13.1%) following its purchase of US Foods is tied to a deal price which analysts see as coming in on the low end.
  • Though shares have fallen back from their lofty +$43 perch, sentiment is still decidedly bullish on volume already 10X normal trading activity due to the enormous synergy opportunities presented by the combination.
  • Unlike many merger partners, Sysco and US Foods are fairly complimentary on a geographic basis.
Comments (10)
  • SteveTheHawk
    , contributor
    Comments (1347) | Send Message
     
    I couldn't say no to the gains, and sold this morning a bit above $42. SYY is a steady dividend payer but not a great DG stock. Very low DGR.

     

    I held the stock for a little over 2 years and I have no complaints. I received the dividend the whole time and have now sold for 60%+ gain. I'm glad I bought this dividend payer when I did, and now I'm glad I sold it when I did....bullish market or not. Now I just have to figure out where to put the proceeds.
    9 Dec 2013, 11:32 AM Reply Like
  • hwood007
    , contributor
    Comments (1207) | Send Message
     
    I did not sell, SYY is a good stock and at what price would I have to pay to buy back my shares, which now have a basis of $24??
    I bought the stock to hold until it is not worth holding and that is not the current circumstances.
    9 Dec 2013, 12:32 PM Reply Like
  • SteveTheHawk
    , contributor
    Comments (1347) | Send Message
     
    I'm not at all recommending that anyone sell. I just feel that I can find a higher DGR and with the huge jump this morning, I now have even more funds to put to use. For me, the time was right. It's all about improving our stream of income.
    9 Dec 2013, 01:19 PM Reply Like
  • Dividend Sleuth
    , contributor
    Comments (1799) | Send Message
     
    Good move. You had to be alert to catch that spike!
    13 Dec 2013, 07:21 PM Reply Like
  • Joe2922
    , contributor
    Comments (419) | Send Message
     
    Author get a dictionary, the correct word is complEmentary here, not what you wrote.
    9 Dec 2013, 11:42 AM Reply Like
  • Dividend Sleuth
    , contributor
    Comments (1799) | Send Message
     
    ...unless the point is that they really like each other and are saying nice things about each other within their geography.
    9 Dec 2013, 12:29 PM Reply Like
  • carolinadad
    , contributor
    Comments (5) | Send Message
     
    While the company talks about expanding territory, what really happens is greatly improved route density...more clients per trip, trucks are more full, some routes will expand volume to larger trucks...all efficiencies in delivery - revenue per mile. Some distribution locations will be consolidated, or at a minimum, routes restructured to utlize the closest or otherwise most advantageous distribution location. Then, there "just might" be some increased pricing power by having eliminated the primary competitor on many routes. Face it, this is a huge market share enhancement in many markets, and pricing will improve. "In market" mergers can provide great expense management advantages, and this one merger will achieve that to a large degree. The combined entity will be far more profitable from increased operational efficiencies alone, plus whatever pricing improvement comes along. (To management: Focus on client satisfaction first, delay any pricing increases that are not cost driven for at least a year. Win the hearts of clients, and this will be a great merger.)
    9 Dec 2013, 02:50 PM Reply Like
  • Maerzie
    , contributor
    Comments (21) | Send Message
     
    If US Foods is an inferior company, which is what I'm seeing, what's to say it won't take SYY down??
    9 Dec 2013, 02:51 PM Reply Like
  • in the Wolf's lair
    , contributor
    Comments (5) | Send Message
     
    In my market , US is not inferior
    11 Dec 2013, 09:11 AM Reply Like
  • Maerzie
    , contributor
    Comments (21) | Send Message
     
    Good to know. Thanks. I am unfamiliar with it. Sysco is everywhere I look around here.
    12 Dec 2013, 09:58 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector