Sysco To Sell US Foods Distribution Centers To Performance Food Group Amid Antitrust Concerns

HOUSTON -- To win the Federal Trade Commission's approval of its pending merger with US Foods, Sysco Corp. said it has reached an agreement to sell 11 facilities to Performance Food Group. According to the agreement, Sysco will sell to Performance Food Group the US Foods facilities, which generated $4.6 billion in revenue last year, upon completion of the merger.

Sysco's $3.5 billion offer for Rosemont, IL-based US Foods has 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 says the merger will allow it to cut operating costs and thus lower prices for customers.

"Unfortunately, the FTC has taken a different view of the potential competitive impacts of the merger," said Sysco president and chief executive Bill DeLaney. "While we respectfully but vigorously disagree with the FTC's analysis, we believe this divestiture package fully addresses its concerns."

Richmond, VA-based Performance Food Group, parent to nationwide vending distributor Vistar, maintains 67 distribution centers and 11 Merchant's Mart facilities across the U.S. Its customers include vending operations, national chain restaurants, quick-service eateries, pizzerias, theaters, schools, hotels, healthcare facilities and other institutions.

"The collection of distribution centers and other assets that Performance Food Group will acquire along with related support services agreements will enable us to compete effectively for national broadline foodservice customers," said Performance Food Group president and chief executive George Holm.

Sysco executives and the five FTC commissioners are set to meet over the next two weeks to discuss its divestiture offer.