Foodservice distributor US Foods has signed a definitive agreement to acquire Smart Foodservice Warehouse Stores for $970m in cash.

According to the deal, US Foods will acquire Smart Foodservice from funds managed by affiliates of Apollo Global Management.

The transaction excludes the Smart & Final retail grocery business.

With the acquisition, US Foods seeks to establish its footprint in the cash and carry foodservice market.

US Foods chairman and CEO Pietro Satriano said: “As we continue to expand our multi-channel strategy, we know customers, particularly independent restaurants, increasingly use cash and carry as a convenient, cost-effective purchasing option.

“With an established footprint and a consistent record of profitable growth, Smart Foodservice will complement our CHEF’STORE cash and carry model and provide a platform to significantly accelerate our presence in this attractive, growing channel.”

The company will fund the transaction through its existing liquidity resources and $700m financing from Citigroup and Bank of America.

The transaction closing is subject to regulatory approval and other customary conditions.

Once complete, Smart Foodservice will operate as a separate unit within US Foods.

As a foodservice distributor, US Foods counts approximately 300,000 restaurants and foodservice operators as its partners.

In September 2019, the company secured the Federal Trade Commission (FTC) approval to acquire five operating companies of Services Group of America (SGA). The deal was valued at $1.8bn.

Based in Oregon, Smart Foodservice is a chain of warehouse-format stores, providing restaurant supplies.

The company operates 70 small-format cash and carry stores that serve small and mid-sized restaurants and other food industry clients.

Last year, Smart Foodservice reported total revenue of approximately $1.1bn.