Sysco said it has addressed the regulatory concern delaying the distribution giant’s planned $8.2-billion purchase of its closest competitor, US Foods, clearing the way for the deal to be consummated.
The concession to Federal Trade Commission concerns would mean restaurateurs served by 11 U.S. Foods distribution centers would at last initially have that link in their supply chains filled by another distributor, Performance Food Group. Sysco agreed to sell the USF centers to Performance once the mega-merger is completed.
“We believe this divestiture package fully addresses FTC concerns,” Sysco told investors during its quarterly financial conference call.
However, CEO Bill DeLaney explained to analysts during yesterday’s conference call that the regulatory agency had not approved the plan. As a result, he said, Sysco intends to present the sales option to the FTC’s five commissioners.
Performance appears to be getting a deal. Sysco said it would receive $850 million in cash for the 11 facilities, whose annual sales were pegged at $4.6 billion.
Even with those lost revenues, the merger will yield financial benefits of at least $600 million after four years.