A US District Court judge granted the Federal Trade Commission’s (FTC) request on Tuesday for a preliminary injunction to block the proposed merger between Sysco and US Foods, two of the country’s biggest food distribution companies.
“The Court's ruling today temporarily blocking Sysco’s proposed acquisition of US Foods will preserve competition in both local and national broadline foodservice distribution markets,” said Debbie Feinstein, FTC director. “We look forward to proving at trial that this deal would lead to higher prices and diminished service for customers, including restaurants, hospitals, hotels, and schools.”
Sysco said it respects the decision, though is disappointed with the outcome.
“We diligently pursued this transaction for nearly two years because we strongly believed the merger of Sysco and US Foods would be procompetitive and good for customers, associates and shareholders,” said Bill DeLaney, president and CEO of Sysco.
Despite the outcome, DeLaney said the company planned for this possibility and the company has plans for the future.
FTC filed a complaint to block the merger in February charging the union violated antitrust laws by significantly reducing competition nationwide.
The commission alleged that if the merger goes forward as proposed, foodservice customers, including restaurants, hospitals, hotels, and schools, would likely face higher prices and diminished service.
In 2013, Sysco announced plans to acquire US Foods in a stock-and-cash deal valued at around $3.5 billion. The deal was approved by the board of each company, and expected to close in the third quarter of 2014. Sysco agreed to assume or refinance US Foods debt worth around $4.7 billion. The merged food-services distributor, with estimated sales of around $65 billion a year, would continue to be called Sysco and will be based out of Houston, Texas.
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