Sysco (SYY) Buys E-Commerce Platform Supplies On The Fly

Sysco Corp. (NYSE:SYY) has recently announced the acquisition of an innovative e-commerce platform named Supplies on the Fly. This platform will allow Sysco customers to place orders for more than 170,000 products online or by telephone. It will offer restaurant supplies and equipment exclusively to Sysco customers.

Though the financials of the deal were not disclosed, it will offer growth opportunities to the company in the restaurant supplies and equipment segment. Sysco expects to retain all employees of Supplies on the Fly, including CEO Craig Callaway.

Supplies on the Fly is based in Kennesaw, GA and generates annual revenues of approximately $105 million. Further, Supplies on the Fly has delivered consistent sales growth in supplies and equipment over the past three years.

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We note that Sysco has been carrying out various acquisitions over the years to grow its distribution network and customer base and boost long-term growth. The company expects to achieve 0.5%–1% sales growth through acquisitions in the long term.

It announced the acquisition of Brakes Group, a leading European foodservice distributor, in Feb 2016. The $3.1 billion deal has received antitrust approval from the European Commission and is expected to close in Jul 2016. It will expand the global food product maker’s footprint in Europe.

Along with Brakes Group, the company had also announced the acquisition of North Star Seafood, which distributes high-quality fresh and frozen seafood to a combination of local, wholesale, cruise, export and retail customers throughout Florida.

Last year, Sysco acquired 50% stake in Mexico based Pacific Star Foodservice, which gave it access to distribution centers in regions where Pacific Star is the leading distributor. This partnership also allowed Sysco to enhance its service to U.S. customers. The company also announced the acquisition of Tannis Trading in Canada. Tannis operates in the Ottawa market, the fourth largest in Canada. This acquisition, which remains subject to regulatory approval, will allow the company to expand its sales in Canada.

Sysco currently has a Zacks Rank #2 (Buy). Some better-ranked food companies include Post Holdings, Inc. (NYSE:POST) , The J.M. Smucker Co. (NYSE:SJM) and United Natural Foods, Inc. (NASDAQ:UNFI) . All of them sport a Zacks Rank #1 (Strong Buy).