Sysco finds buyer for 11 food distribution centers — Looks like the FTC is going to approve a near food service monopoly
Wonder if there is a secret allocation of territory agreement with the PFG purchase?
Sysco finds buyer for 11 food distribution centers
By Rita Jane Gabbett on 2/2/2015
Houston, Texas- based Sysco announced it has reached a definitive agreement to sell Performance Food Group 11 US Foods facilities related to its 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.
The agreement calls for Sysco to sell Performance Food Group the following US Foods facilities at the completion of the US Foods transaction: Corona, Calif.; Denver, Col.; Kansas City, Kan.; Phoenix, Ariz.; Salt Lake City, Utah; San Diego, Calif.; San Francisco, Calif.; Seattle, Wash.; Cleveland, Ohio; Las Vegas, Nev.; and Minneapolis, Minn.
"Over the past 12 months, we have worked in good faith with the FTC to help them better understand the highly competitive U.S. foodservice distribution industry and the significant customer benefits that will result from the merger of Sysco and US Foods," said Sysco President and Chief Executive Officer Bill DeLaney. "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.
In US Foods’ most recent fiscal year, these distribution centers generated $4.6 billion in annual revenue. 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.
Sysco distributes food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. The company operates 194 distribution facilities serving approximately 425,000 customers. For fiscal 2014 that ended June 28, 2014, the company generated sales of more than $46 billion.