Sysco Corp will buy US Foods for about $3.5 billion from its private equity owners in a deal that will combine the top two US food distributors and create a company commanding about a quarter of the $235 billion North American market.

Sysco, whose shares jumped about 25 per cent to a record high in early trading, will also assume US Foods’s debt of about $4.7 billion as it combines its supply chain expertise with the strong consumer-facing technologies of US Foods.

Shareholders of US Foods, owned by affiliates of private equity firms Clayton, Dubilier & Rice and KKR & Co, will own about 13 per cent of Sysco after the closing of the deal, which creates a company with revenue of $65 billion.

Sysco shares were up 12 per cent at $38.31 in late morning trading on the New York Stock Exchange. – (Reuters)