Dive Brief:
- To receive Federal Trade Commission approval for its potential merger, Sysco and US Foods have offered to divest 11 distribution centers with $5 billion in sales to Performance Food Group, in hopes of making it a national competitor that might replace US Foods, Reuters reported Jan. 30. An official announcement came Feb. 2.
- The FTC launched a skeptical antitrust investigation into the two rival, industry-leading food distributors due to concerns that these two companies are the only ones with the geographic reach to offer contracts for a wide range of goods to businesses nationwide.
- Sysco says that the merger would allow the two companies to run "fewer warehouses and fuller trucks," which would reduce customer costs, reports Reuters.
Dive Insight:
Sysco first proposed acquiring US Foods in December 2013. Last quarter, Sysco's net income fell year-over-year, but the earnings report came as the company wanted to unload some units to appease FTC regulators. In November, employees of both companies protested outside Sysco's shareholders meeting with concerns about their livelihoods pending the potential merger. And in December, to sweeten the deal for regulators, Sysco offered to sell $5 billion in assets, also to Performance Food Group, as well.