Sysco Corporation (NYSE:SYY) has reached a definitive agreement to sell 11 US Foods facilities to Performance Food Group (PFG) related to Sysco’s pending merger with US Foods. The divestiture package is contingent on consummation of the proposed merger of Sysco and US Foods announced in December 2013.
“Over the past 12 months, we have worked in good faith with the FTC (Federal Trade Commission) to help them better understand the highly competitive US foodservice distribution industry and the significant customer benefits that will result from the merger of Sysco and US Foods,” said Bill DeLaney, Sysco’s president and chief executive officer. “Unfortunately, the FTC has taken a different view of the potential competitive impacts of the merger. While we respectfully but vigorously disagree with the FTC’s analysis, we believe this divestiture package fully addresses its concerns.”
Sysco will now present its position, including this proposed remedy, to the five FTC commissioners and seek to obtain their approval.
The agreement calls for Sysco to sell PFG the US Foods facilities at these locations upon completion of the transaction: Corona CA, Denver CO, Kansas City KS, Phoenix AZ, Salt Lake City UT, San Diego CA, San Francisco CA, Seattle WA, Cleveland OH, Las Vegas NV, and Minneapolis MN.
In US Foods’ most recent fiscal year, these distribution centers generated $4.6 billion in annual revenue. Sysco and PFG have also have agreed on a multi-year transition services agreement to ensure a smooth transfer of assets from US Foods to PFG by providing support services and personnel to help PFG succeed as the new owner in these locations.
After selling these facilities, Sysco estimates it still will be able to achieve net annual synergies of at least $600 million in four years. This estimate reflects additional synergies identified during the company’s integration planning efforts.
To learn more, access www.sysco.com, www.usfoods.com, or www.pfgc.com.