Performance Food Group (PFG) is moving further to expand its business outside the restaurant industry.
The Richmond, Va.-based broadline distributor on Tuesday announced an agreement to buy Core-Mark for a combination of cash and stock. The deal is valued at $2.5 billion, including assumed debt.
The deal is designed to create a “best-in-class convenience business,” combining PFG’s Vistar Segment with the Core-Mark and Eby-Brown business out of Naperville, Ill. The convenience business will operate under the Core-Mark brand and be headquartered in Westlake, Tex.
PFG CEO George Holm called Core-Mark an “outstanding company that we believe will significantly strengthen our business diversification and expansion into the convenience store channel.”
He said the deal “comes with strong strategic and financial merits” that will “generate significant customer benefits.” He said the two organizations have “similar cultures, which we expect will facilitate a smooth integration and transition process.”
It’s also a sign that distributors that served primarily restaurants are still looking at diversification even amid signs of an industry recovery.
Distributors had been looking at diversifying their business lines for some time, but that intensified a year ago when many of them lost a lot of business as restaurants were forced to close dining rooms to prevent the spread of COVID-19. Many companies started eyeing retailers, including grocers and convenience stores, to hedge their bets. Others started delivering pantry supplies to consumers' homes.
For a company like PFG, which is competing with two larger rivals in Sysco and US Foods, the c-store business provides another growth opportunity. The company first broke into the business in 2019 with its acquisition of Eby-Brown. Core-Mark is one of the largest wholesale distributors to that business, with about $17 billion in net sales and 32 distribution centers.
“Adding convenience store distribution in 2019 built up the core strength of our organization, providing another avenue for growth,” Patrick Hagerty, CEO of Vistar, said in a statement.