US Foods has signed a definitive agreement with Services Group of America (SGA) to purchase five operating companies for $1.8bn in cash.

Collectively known as SGA’s Food Group of Companies, the five entities involved in the deal are Food Services of America (FSA), Systems Services of America (SSA), Amerifresh, Ameristar Meats, and Gampac Express.

FSA is a regional broadline distribution company in the US, serving 16 states through nine distribution centres.

SSA is a multi-unit distribution foodservice company offering distribution services to casual and fast casual dining establishments, as well as regional and national QSR chains.

Amerifresh offers produce sourcing and marketing capabilities, Ameristar Meats delivers custom meat products, and Gampac Express provides supply chain planning and logistics services.

US Foods chairman and CEO Pietro Satriano said: “This acquisition will significantly increase US Foods’ reach across key markets in the attractive and growing north-west region of the US and adds one of the most well-regarded regional distributors to our company.

“SGA’s Food network of 33,000 customers, 12 distribution centres and more than 20 private brands will enhance US Foods’ overall scale.”

“With a shared commitment to customer service, including a proven track record of leveraging technology and private brands to meet customer needs, SGA’s Food Group of Companies is an ideal fit.

“The company’s unique merchandising programmes, mature local sourcing capabilities and track record of operational excellence will be strong additions to our business.

“We look forward to welcoming the talented teams at SGA’s Food Group of Companies to US Foods, providing customers with even better service and expanded capabilities, and delivering accelerated growth and value to our shareholders.”

US Foods’ board of directors have unanimously approved the transaction. However, it is subject to regulatory approval and other customary closing conditions.

The deal is expected to expand the company’s network in the north-west. SGA’s Food network of 33,000 customers, 12 distribution centres and more than 20 private brands will enhance US Foods’ overall scale.

In addition, the transaction will allow US Foods to achieve approximately $55m in annual run-rate cost synergies by the end of fiscal 2022.

US Foods will finance the transaction primarily with $1.5bn through a fully committed term loan financing from JP Morgan and Bank of America Merrill Lynch, with the remainder through its existing liquidity resources.