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Sysco Edges Closer to Finalizing its Deal with US Foods

Syscos acquisition of rival food distribution service US Foods has been in the works for months now, and it hasnt always been the smoothest acquisitio...

Frazer Jones
|Nov 24|magazine8 min read

 

Sysco’s acquisition of rival food distribution service US Foods has been in the works for months now, and it hasn’t always been the smoothest acquisition process—at various points, threats of antitrust issues and Federal Trade Commission-backed lawsuits have put the whole transaction in jeopardy. But according to a new report, Sysco is closer than ever to closing the deal successfully.

The New York Post reports that close sources are expecting the FTC to give the green light to the Sysco-US Foods merger very soon, as long as Sysco upholds its end of the deal in finalizing some divestitures:

“I think it’s going through,” a source said. “All parties are on the same page.”

 

The report suggests that Sysco may be divesting the unnamed assets to Performance Food Group, a primarily East Coast-based distribution service owned by Blackstone Group. Reuters adds that Sysco is also heavily engaged in talks with regional distributors Reinhart Foodservice and Gordon Food Service as additional potential buyers for some of the assets that Sysco needs to purge before it can move forward.

The parties involved have yet to comment on these speculations, meaning that despite advanced dealings it’s still too soon to know any specifics of the deals or if they will even be finalized themselves. Given that there’s only one full calendar month left in 2014, it’s also a reach to expect that these peripheral deals—let alone the Sysco-US Foods merger altogether—will be fully completed before the end of the calendar year. But they are still pushing ahead toward completion which has, as the Post explains, led workers and representatives in the supply chain industry to start speaking out more strongly in anticipation of the completed deal:

This week, Teamsters union members protested outside Sysco’s annual shareholder meeting in Houston, saying they would fight to keep their jobs and benefits. Union workers fear the combined company will cut routes and combine warehouses as they serve customers in the same markets. A driver at a competing food distributor said rivals also are worried that a combined Sysco-US Foods will undercut them on price.

 

If the FTC does ultimately approve Sysco’s acquisition of US Foods, these fears will not likely go away despite the agency’s best efforts until the deal finally closes and the companies are given a chance to prove otherwise. But if they are ultimately as successful in making it to that stage as it seems like they soon will be, the new entity would be wise to really take the concerns of Sysco and US Foods workers alike seriously and continue to support them while the two distribution businesses enter the process of becoming one.

 

[SOURCE: New York Post; Reuters]