Sysco Ends Planning To Merge With With US Foods

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Image Source: WSJ
Image Source: WSJ
Image Source: WSJ

Sysco Corp. has terminated its planned merger with U.S. Foods after the Federal Trade Commission’s request for preliminary injunction to block the deal was granted.

In February, the FTC filed an administrative complaint arguing that the merger of Sysco and US Foods would violate antitrust laws. The FTC said it would significantly reduce competition nationwide and in 32 specific markets. The U.S. District court in Washington D.C. agreed and eventually granted the FTC’s preliminary injunction.

Sysco, the nation’s largest purveyor of food and other supplies to restaurants and cafeterias, had been working on the merger for more than a year and a half when U.S. District Judge Amit Mehta in Washington last week issued a preliminary injunction to stop the deal on concerns it could hurt competition. The Federal Trade Commission had filed a lawsuit in February challenging the transaction on antitrust grounds.

Bill DeLaney, Sysco’s chief executive, said that after reviewing its options, including whether to appeal the judge’s decision, the company determined it was best to move on.

By ending the agreement, Sysco has also terminated a deal with Performance Food Group to purchase US Foods in 11 markets. Sysco must also pay break-up fees of $300 million to US Foods and $12.5 million to PFG.

We believed the merger was the right strategic decision for us, and we are disappointed that it did not come to fruition,” said DeLaney. “However, we are prepared to move forward with initiatives that will contribute to the success of Sysco and our stakeholders.