Sysco Adds Hawaiian Distributors to FreshPoint Business

Zacks Equity Research

Sysco Corporation SYY announced the buyouts of Hawaii based sister companies — Armstrong Produce and Kula Produce. The acquisitions will form part of Sysco’s specialty produce company — FreshPoint — within the broader U.S. Foodservice Operations.

Acquisitions are Key Growth Catalyst

Assessing and entering new market opportunities is a vital business growth strategy for Sysco. The inclusion of Armstrong Produce and Kula Produce are likely to boost Sysco’s access across Hawaiian markets and expand assortments capacity.

Armstrong Produce and Kula Produce are Hawaii-based broadline fresh produce wholesalers and distributors. Together, they boast revenues of nearly $155 million. Armstrong Produce has its operations spread over Honolulu, Kona and Kahului. It offers services to a wide range of customers, starting from local chefs to retailers.

Such strategic buyouts have enabled the company to grow its distribution network, expand customer base and enhance long-term prospects. Prior to this, it announced the buyout of J. Kings Food Service Professionals on Aug 12. It also acquired sister firms — J & M Wholesale Meats and Imperio Foods. Sysco also announced a deal to acquire Waugh Foods, a Central Illinois-based distributor.

Some of the other noteworthy acquisitions of the company include HFM in Hawaii, Doerle Food Service in Louisiana and Kent Frozen Foods in the U.K. Also, the company inked an agreement in Sweden and bought the remaining 50% stake in Mayca Distribuidores of Costa Rica. The takeovers of Supplies on the Fly, North Star Seafood, Gilchrist & Soames and 50% stake in Mexico-based Pacific Star Foodservice are noteworthy. Well, such moves have augmented Sysco’s portfolio and provided it revenue-generating opportunities.

Wrapping up

Apart from strategic mergers, the company resorts to innovations and revitalization of brands to bolster business. It also undertakes efforts to enhance digital shopping capabilities, induce supply-chain efficiencies and manage costs effectively. Going ahead, we believe that such upsides will continue to boost investors’ optimism in this Zacks Rank #3 (Hold) company. The stock has gained 11.7% in the past three months compared with the industry’s rise of 3.4%.

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