Sysco Terminates Merger With US Foods

HOUSTON -- Sysco Corp. said it has terminated its merger agreement with US Foods, days after the U.S. District Court in Washington, DC, granted the Federal Trade Commission's request for a preliminary injunction to block the proposed merger.

Sysco's $3.5 billion offer for Rosemont, IL-based US Foods had been awaiting FTC approval for more than a year amid concerns that a combination of the nation's two largest food distributors would give Sysco too much pricing power. Sysco said the merger would allow it to cut operating costs and thus lower prices for customers.

The termination of the merger also ends an agreement with Performance Food Group, parent of vending distribution giant Vistar, to purchase US Foods facilities in 11 markets. Sysco agreed to sell the distribution centers to alleviate antitrust concerns. | READ MORE

Under terms of the agreement, the termination of the transaction requires Sysco to pay breakup fees of $300 million to US Foods and $12.5 million to PFG. "After reviewing our options, including whether to appeal the court's decision, we have concluded that it's in the best interests of all our stakeholders to move on," said Sysco president chief executive Bill DeLaney.