Sachem Head is pushed to integrate performance food. This is the reason for a logical deal

Company: Group Food Group (PFGC)

a job: Performance food group It is a food distribution company and food services that operate through three sectors: food services, specialization (previously “” Vistar “), and comfort. The food services sector distributes a range of national brands and brands for customers and products related to foods and brands with independent and multi -unit restaurants and other institutions. Its sector specializes in distributing candy, snacks, drinks and other elements at the national level to buy offices, coffee service, theater, retail, hospitality, and other channels. Its sector distributes desserts, snacks, drinks, cigarettes, other tobacco products, foods related to foods, and other elements to stores throughout North America. It distributes more than 250,000 food and food products to customers throughout the United States from about 144 distribution facilities to more than 300,000 customer sites in the food industry from home.

Market value shares: 16.34 billion dollars ($ 104.40 per share)

Activist: Capital Management Sachem

Ownership of the percentage: ~ 2 – 4 %

Average cost: us

Activist’s comment: Sachem Head was founded in 2013 by Scott Ferguson, the first investment professional appointed to Pershing Square, where he was working for nine years. Sachem Head has a strong value, but we believe that they have already found active steps in 2020 with their investments in First. Scott Ferguson has occupied the seat of the Board of Directors in OLIN – the first seat of the board of directors of a public company he obtained in an investment was not part of a group – and created a huge value there. Recently, after the nomination of the major director, the Sachem President settled for Three seats in the United States FoodsAnd recently He settled on the seat of the board of directors in twilio In April 2024. The occupation of the council’s seats indicates both commitment and contribution, and this philosophy and style are truly fruitful to the President of Sachem.

What is happening

On August 21, Sachem Head A handed over Nomination notification For the next four candidates to stand in the food performance group elections at the annual meeting 2025: Scott D. Ferguson, David A. Toy, R. Chris Kreidler and Karen M. King. In addition, SACHEM Head urged the company to explore a potential business mix with American foods and the absence of treatment, which increases the margin improvement.

backstage

The dietary performance group is the third largest food services distribution company in North America, behind it Cisco and American foodsWhich all require about 38 % market share. The company operates through three sectors. The basic food services sector (61.8 % of profits before benefits, taxes, depreciation and consumption) distributes national products, customers and foods related to foods. Rest (20.6 %) distribute candy, snacks, drinks, cigarettes and other tobacco products to stores. Specialization (17.61 %) distributes desserts, snacks, drinks and other elements for specialized sellers.

On August 21, Sachem Head made a notice of nomination for the next four candidates to stand in the elections to the PFG board at the annual meeting of 2025: Scott D. Ferguson (founder and administrative partner of Hasim Hed), David A. Toy, R. Chris Credler and Karen M. King.

In addition, Sachem Head PFG urges to explore a potential business mix with American foods, and the absence of treatment, which increases margins improvement.

Ferguson presented and played together on the American food panel as part of the SACHEM Cooperation Agreement. In US Foods, Sachem Head helped install a new executive director and a management team, which motivated a successful transformation of the company. Since the Sachem Head presented 13D in the United States Foods, the company’s shares have doubled more than twice.

The other two candidates have great experience: Kreidler was the financial manager of SYSCO for six years, and King CEO of McDonald’s And serve on Aramark blackboard. This is a team of stars of candidates in a good PFG movement through operational improvements and strategic evaluation.

While there is an opportunity to improve the operating margins in the company, the main catalyst here is to integrate with American foods. The potential synergy that can be achieved in such a mix makes it very difficult to ignore. These codes are clear from the unification of another proposed industry, SYSCO 2013 attempt to integrate with American foods. Publicly, this deal was expected to provide an annual azage of at least $ 600 million within three to four years compared to US Foods $ 826 million from Ebitda at the time. In other words, the expected synergy represented more than 70 % of Ebitda for American food, and the numbers were greater. This is an unusual, unique, unique personality for the scene of food distribution, the amount of synergy for purchase, logistical services, and rationalization of warehouses that have these companies. Establishing these numbers to integrate American food/PFG and apply similar levels of synergy using EBITDA from the PFG food services sector ($ 1.2 billion), which carries most of the synergy capabilities, can be expected to result from the integration of $ 800 million to up to $ 1 billion in bonds. Moreover, if anyone can check this analysis, he will be the candidate of the SACHEM director Chris Credler, who was the financial manager of SYSCO at the time.

However, the SYSCO/US Foods deal was banned by the Federal Trade Committee due to the anti -monopoly concerns that focus on the inclusion of No. 1 and No. 2 that would eliminate the only national competitor in SYSCO. There are some reasons that make the merger between us food and food performance may have a different result. First, this will be a merger of the second and the third is the largest players, instead of the first and second; Unlike SYSCO, PFG is not a national competitor, with a little footprint on the western coast. In addition, the organizational environment today under the Trump administration is much more suitable than it was when the Sysco deal was reviewed as part of the Obama administration. Although any accredited deal is likely to require abstraction in certain markets and there is no guarantee of approval, with a possible synergy like this, the board of directors owes it to its shareholders to explore at least the possibility of the merger of American food. This is all that Sachem’s head asks. They do not force the company to sell, but rather begging them to assess this possible profitable opportunity to them.

In July 2025, American food confirmed in a 8-K file that they dealt with PFG about a possible group. But it takes two to Tango, and so far, PFG has not beneficial with them. Looking at these current feelings, it seems unlikely that sincere view of this deal will occur without confirming a little pressure on the plate, and Sachem Head is thus in the form of a proxy battle threatening that it will get an excellent chance to win. It is not only a dealer’s battles about the power of the argument, and it has a great Sachem Head here, but the company’s shareholders’ base contains many alternative asset managers who are likely to support an active agenda like this from traditional index boxes. These shareholders have a history of being accepted for good active campaigns, and the potential upward trend of this plan can be admirer, and the strong Slath Sachem president who nominates him must be sufficient to hear the box.

Moreover, there is speculation that even before the Sachem Head shared, the changes in C-SUITE were imminent. For more than 17 years, the company runs CEO George Holm, a pioneer in the industry widely respected. Now, it is rumored that Holm will step down soon, may be replaced by the company’s president, Scott I. McFireson. The transition of the CEO such as this is the perfect time for a strategic treatment for all concerned, with the exception of perhaps McPherson. When two companies merge of the same size in the equal merge process, the evaluation is often the easy part. They are social issues that are often deals deals. This dynamic can be exacerbated when the merger is suggested just and the president eventually receives contact with the CEO. However, McPherson was not PFG and was with the company only for a year and a half, and therefore the social issues surrounding the leadership of the remaining entity should be achieved.

The councils, their consultants and some shareholders are often opposed to any type of “sale of the company”, often for a good reason. Often, we are the largest critical of this type of short -term activity that gives the creation of the future value of the private stock fund or a strategic preparation instead of shareholders. But the thesis “Merging Companies” is different, especially when there is a convincing synergy that creates value for all shareholders. The treatment between players should come mainly in the form of an stock -based group, which would allow the shareholders of PFG and US Foods to participate in creating value in the long term that will arise from the merger.

We expect to be an experienced activist like Sachem Head capable of persuading the council of this council and that the great result of the shareholders will be a settlement to add two to three managers to the board of directors, as well as the establishment of a new committee that focuses on assessing strategic alternatives with at least one of the new managers in that committee. This may lead to a treatment that can be a surprise for all concerned.

But if an evaluation is ultimately performed and the independent path is determined to be the best result, this is still a strong company and a large return on capital works with space to improve costs and margins around the edges – the areas that Sachem Head will also be.

Ken Squire is the founder and head of 13D Monitor, an institutional research service on shareholders ’activity, founder and manager of the 13D activist Fund portfolio, a joint fund that invests in a set of 13D active investments. Group Food Group is owned by the box.