Performance Food Group plans to purchase Westlake, Texas-based Core-Mark in a stock and cash deal for $2.5 billion.
The two publicly traded companies announced the combination on May 18 that will expand PFG’s convenience store segment thanks to the breadth and depth of Core-Mark’s footprint in the United States and Canada.
Core-Mark is one of the largest wholesale distributors to the convenience retail industry, serving about 40,000 customer locations with approximately 7,500 employees and 32 distribution centers.
The Fortune 500 company is the 11th largest publicly traded company by revenue in North Texas, according to Dallas Business Journal research – though it only moved to the area in the past few years by way of San Francisco.
Richmond, Virginia-based PFG first added convenience store distribution in 2019, which includes the company’s Eby-Brown businesses under its Vistar segment.
The expanded convenience store distribution arm will operate under the Core-Mark name and will continue to be based out of Westlake upon close of the deal. Core-Mark’s current president and CEO will continue to quarterback the organization once it’s folded into PFG.
Core-Mark worked with Weil, Gotshal & Manges on legal matters and Barclays on financial matters for the transaction.
Silicon Valley partner Craig Adas led the Weil M&A team that included partner James Griffin of Dallas, counsel Nicholas Doloresco of Silicon Valley, and associates Claudia Lai of Dallas, Kevin Thomas of Silicon Valley, Nathaniel Moore of Silicon Valley and Joseph Shui of Silicon Valley.
The Weil team also included tax partner Joseph Pari of Washington, D.C., benefits partner Paul Wessel of New York, antitrust partner Jeff Perry of Washington, D.C., banking partner Gabe Gregson of Silicon Valley, and technology and IP transactions partner Karen Ballack of Silicon Valley.
Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to PFG, while BMO Capital Markets Corp. acted as financial advisor. J.P. Morgan Securities provided PFG’s board of directors with a fairness opinion.
The Skadden team is led by M&A partner Jeremy London, counsel Micah Kegley and associate Paul Bolaji, all of Washington, D.C., in addition to antitrust/competition partner David Wales of Washington, D.C.; executive compensation and benefits counsel Page Griffin of New York; banking partner Stephanie Teicher of New York; capital markets partners Laura Kaufmann Belkhayat of New York and Michael Hong of New York and Toronto; tax partner Jessica Hough of Washington, D.C.; labor and employment partner David Schwartz of New York; intellectual property & technology Ken Kumayama of Palo Alto; and litigation partner Robert Saunders of Wilmington.
The transaction, which includes net debt, will deliver $23.875 in cash and 0.44 PFG shares per Core-Mark share. Core-Mark shareholders will hold 13% of PFG upon close of the deal.
To finance the cash portion of the deal, PFG will borrow from its asset-based revolving credit facility and the issuance of new senior unsecured notes.
As part of the deal, at least one Core-Mark board member will join the PFG board of directors.
The deal has already been approved by both companies’ boards and, pending customary regulatory approvals and antitrust clearance, is expected to close in the first half of 2022.
In early trading on May 18, Core-Mark shares were trading up about 5%, while PFG’s dropped by about 5%.