FTC Delays Vote on Proposed Merger Between Sysco and US Foods

Sysco and US Foods MergerThe FTC was all set to vote to block a $3.5 billion merger between food industry giants, Sysco and US Foods. However, the FTC decided to postpone the decision after day-long intense meetings with Sysco, according to the New York Post. During the run-up to the FTC vote, Sysco has been aiming to convince the FTC’s five commissioners that cost savings from the merger will allow it to lower prices, but the effort appeared unsuccessful in the hours before the proposed vote. The newspaper’s sources have said the FTC is leaning towards suing to block the merger.

In an attempt to avoid an anti-trust suit by the FTC, Sysco has offered to sell 11 US Foods facilities, which account for $4.6 billion in revenue and/or 21% of all US Foods revenues. However, the FTC purportedly wants Sysco to further divest assets generating some $2 billion in revenue. The deal between Sysco and US Foods, including the debt that Sysco would assume, is worth $8.2 billion.

According to sources close to the FTC, some of the FTC commissioners appear open to accepting divestitures from Sysco as an alternative to filing suit. However, in the year since the investigation into the merger began, little has happened to change the FTC’s stance on blocking the merger. As a result, the FTC may just be delaying the inevitable, but some commissioners’ willingness to accept divestitures as an alternative means that the merger may still yet happen. Sysco says it is still hopeful that even if litigation ensues the deal between Sysco and US Foods can remain place. It isn’t exactly clear when the FTC plans to vote on the merger.