Services Group to Buy Marriott Distribution Unit

Services Group of America Inc., a closely held holding company for food distributors, agreed Sunday to buy Marriott International Inc.’s food distribution business to allow it to expand into California and elsewhere in the West. Terms weren’t disclosed.

Services Group’s McCabe’s Quality Foods Inc. distributes food throughout the Pacific Northwest and Pacific Rim to such chains as Burger King, Wendy’s and Arby’s.

The transaction will extend its territory to California, Arizona and Idaho and add Marriott clients Red Lobster, Olive Garden, Black Angus and Sizzler among other restaurants, the company said.

McCabe’s also will take over Marriott Distribution Services’ operations in Los Alamitos, Milpitas, Calif., and Salem, Ore., the company said.

The acquisition will more than triple sales for Portland, Ore.-based McCabe’s to about $650 million annually and will boost Services Group’s annual revenue to more than $2.2 billion, Chairman Thomas J. Stewart said.

Bethesda, Md.-based hotel operator Marriott announced this year that it wanted out of the food distribution business after the division had $1 million in operating losses and $5 million in restructuring and other charges in 2001.

The food division, which supplied food to Marriott hotels in addition to other clients, contributed about 10% of Marriott International’s $10 billion in annual revenue last year.

Shares of Marriott International rose 43 cents to close at $34.57 Friday on the New York Stock Exchange.