Lou Whiteman

I'd agree that the Cisco deal is the more interesting of the two to me.

If you're not familiar, Cisco is the largest food service distributor in the United States.

I had a short career in the restaurant industry many years ago.

I worked at a total of four restaurants across two states.

Cisco was the primary food supplier for all of them.

That's among the other 700,000 restaurants it serves worldwide.

It has a massive distribution network.

It gives it a major efficiency advantage over its competitors.

On the other hand, Restaurant Depot, it's a network of in-person wholesale restaurant supply warehouses.

Think of it as like a Costco or a Sam's Club, but specifically for restaurants.

It's carved out a very nice niche among restaurant owners who value flexibility in pricing over the convenience of the national distributor, Cisco.

There have been a few decent examples of deals like this that have worked.

Performance Food Group, getting back to the Cisco situation, is one that looks really interesting.

Ticker symbol is PFGC.

Between 2019 and 2023, it acquired three of its major competitors, including Cheney Brothers, which is a big Cisco competitor.

A major reason was to add new consumer segments, which is one of the reasons Cisco is acquiring Restaurant Warehouse.

The stock is up 160% since the start of 2019.

I'd call that a pretty solid example and a pretty close parallel.

But I completely see your point.

There is a lot that can go wrong with these types of acquisitions, especially when a company like Cisco is taking on $21 billion of new debt to make it happen.