Sysco sells $15.65 billion in bonds to help pay for its $29 billion Restaurant Depot deal

Sysco Corporation, the country's largest food-service distributor, sold $15.65 billion worth of bonds on Tuesday, one of the biggest single-day corporate debt offerings of the year and the clearest sign yet of how expensive its plan to reshape the wholesale food business has become. The Houston-based company priced the notes in three pieces — dollar-denominated senior notes, dollar-denominated junior subordinated notes and a euro tranche — to help pay for its pending $29.1 billion acquisition of Jetro Restaurant Depot, the cash-and-carry warehouse chain better known to shoppers as Restaurant Depot.

The sale, disclosed in a filing with the Securities and Exchange Commission, is not a new deal in itself. It is the financing that makes an old one possible: the Jetro purchase that Sysco announced in March, by far the largest acquisition in the company's history, and one that Wall Street has been nervously pricing in ever since.

The numbers behind the sale

Sysco and its newly formed parent, Sysco Holdings Corporation, issued $10.75 billion of senior notes in seven maturities running from 2029 out to 2066, with coupons ranging from 5.450 percent to 6.600 percent. Alongside that, the companies sold $3.9 billion of dollar-denominated junior subordinated notes — hybrid securities, rated lower than ordinary debt, that reset their interest rates every five years starting in the early 2030s at coupons of 7.100 percent, 7.250 percent and 7.350 percent. A third piece, €1 billion of euro-denominated junior subordinated notes, rounded out the offering. Net proceeds came to roughly $10.64 billion, $3.8 billion and €0.99 billion, respectively, after underwriting discounts, according to the filing.

All told, Tuesday's sale raised the equivalent of about $15.65 billion in new, long-dated debt in a single day. The company said the money is earmarked to pay "a portion of the cash consideration" for the Jetro deal and related fees; if the acquisition falls apart, most of the notes would be subject to mandatory early redemption.

The bond sale is the latest step in a financing campaign that has been running since the spring. Sysco originally lined up a $22 billion, 364-day bridge loan to cover the cash portion of the purchase price, then chipped away at that commitment with a $3 billion delayed-draw term loan in April, a new $3 billion revolving credit facility it can expand to $4 billion after closing, and a C$1.5 billion senior notes offering in September, before Tuesday's much larger dollar-and-euro sale. A prospectus supplement filed with the SEC shows the bridge commitment had already been cut to $17.28 billion before this week's notes were sold, and the same filing discloses that Jetro itself carried about $4.6 billion of third-party debt, mostly private-placement notes and mortgages, as of late June.

How Sysco got here

The underlying deal dates to March 30, when Sysco said it would buy Jetro Restaurant Depot, a 166-store, 35-state chain of warehouse outlets that sells food and supplies directly to small independent restaurants and shopkeepers who pay cash and haul away their own orders. Jetro's equity holders are to receive $21.6 billion in cash and 91.5 million shares of Sysco Holdings stock, together valuing the business at about $29.1 billion, or roughly 14.6 times its operating income.

Jetro, founded five decades ago by the South African-born billionaire Nathan Kirsh, generated about $16 billion in revenue and $2.1 billion of EBITDA in calendar 2025, with a three-decade streak of earnings growth. It is a different business from Sysco's core model of trucking food to restaurant kitchens: customers at Jetro's warehouses pay up front and carry their own goods out, a format executives describe as resistant to downturns because cost-conscious operators tend to use it even more in a weak economy.

"We see a long runway of opening new Jetro Restaurant Depot warehouses, bringing the industry leader in affordability to hundreds of new communities and creating thousands of new jobs," Kevin Hourican, Sysco's chairman and chief executive, said when the acquisition was announced.

Under the agreement, Jetro will operate as its own business segment inside Sysco rather than being folded into the existing distribution network, and Sysco has said it expects the deal to be accretive to earnings per share in its first year and to deliver about $250 million a year in cost synergies within three years.

Who is affected

The most immediate effect falls on Sysco's balance sheet and its shareholders. The company is financing roughly $21 billion of the purchase price with new debt, on top of its existing obligations, pushing leverage toward roughly 4.5 times adjusted earnings at closing — well above the levels investment-grade food distributors typically carry. Sysco has suspended share buybacks to direct cash toward paying down that debt.

Bondholders are now on the other side of that trade, having been offered yields as high as 6.6 percent on the longest senior notes and north of 7 percent on the subordinated notes in exchange for lending into a more leveraged company. Jetro's roughly 725,000 independent-restaurant and small-business customers, and its employees across 35 states, are watching a deal that promises new warehouses and "thousands of new jobs" but also a change of ownership for a business that had stayed in the Kirsh family for 50 years. Rival wholesalers and grocery-adjacent distributors are watching too, since a combined Sysco-Jetro would sit astride both the delivery and cash-and-carry channels of the food-service business.

How Wall Street has reacted

The market's verdict on the deal itself was swift and negative: Sysco shares fell sharply the day the acquisition was announced, and Citi cut its price target on the stock, citing the debt load and what it called a "multi-year execution overhang" as Sysco integrates a very different kind of business while servicing the new borrowing. Rating agencies moved in the same direction: Moody's and Fitch placed Sysco's ratings on review for downgrade, and S&P revised its outlook on the company to negative, all citing the jump in leverage from the deal.

Pricing this week's notes with seven dollar maturities and three subordinated tranches, rather than relying solely on the bridge loan, is the kind of step ratings analysts generally view as prudent — it locks in long-term, fixed-rate financing rather than leaving the company exposed to a one-year loan that must be refinanced or repaid in a hurry. Whether it is enough to stave off an actual downgrade, as opposed to a negative outlook, will depend on how quickly Sysco can bring leverage back down after the deal closes, and on how smoothly the integration goes.

What happens next

The Jetro acquisition is expected to close by the third quarter of Sysco's 2027 fiscal year, which would put a completion date sometime in the first half of calendar 2027, subject to regulatory clearance and other customary conditions. Antitrust review is likely to focus on the overlap, if any, between Sysco's delivery-based distribution and Jetro's warehouse-club model, since the two companies have historically served different types of customers.

In the meantime, Sysco still has room left on its bridge facility, plus a $750 million delayed-draw term loan arranged through farm lender CoBank, and could come back to the bond or loan markets again before the deal closes if it needs to raise additional permanent financing or refinance what remains of the short-term loan. Investors will get their next detailed look at the integration plan, and at how leverage is trending, when Sysco next reports quarterly results and when the company and Jetro file further updates on the transaction with the SEC.