Sysco in Talks with FTC Over US Foods Merger
HOUSTON, TX – Executives from Sysco are in talks with the U.S. Federal Trade Commission (FTC) to try to save its $8.2 billion merger with US Foods from a potential antitrust lawsuit.
"We continue to engage in productive discussions with the FTC and other stakeholders regarding our merger with US Foods. We are confident that those discussions will lead to completing the merger in the fourth quarter of this year," Sysco spokesman Charley Wilson said to Reuters.
Last June, Bill DeLaney, Sysco President and CEO, spoke on the FTC decision saying, “We continue to believe that the Commission, once it finishes its investigation, will conclude that our industry is – and will continue to be – fiercely competitive. Our proposed merger will benefit customers and help us become more efficient in this rapidly evolving marketplace.”
The New York Post reports that the FTC is expected to decide by October 31 if it will block the deal between the number 1 and 2 food distributors in the country. If the FTC does indeed approve the deal, the two businesses would represent more than 25% of the $231 billion U.S. food-distribution industry.
Sources tell the Post that Deborah Feinstein, FTC’s Head of Competition, has told the FTC’s five commissioners that she is ready to sue to block the deal unless certain conditions are met. Those conditions may simply force Sysco to divest assets in areas where there’s too much geographical overlap. A Barclays report states that a number of industry experts believe that Sysco would have to divest approximately 15 facilities, or $6 billion of its revenues.
Sources tell AndNowUKnow that the merger shouldn’t concern larger suppliers, but it could possibly have an effect on some smaller suppliers who have a greater allocation for their customer base.
In an ANUK poll, our readers said that they believe some divestments will be made, but the merger will go through. More than 50% said that they did not support the merger.
For now, we’ll have to wait and see how the FTC decides. Stay tuned to AndNowUKnow for the latest updates on the Commission’s examination of the Sysco and US Foods merger.
