First Posted: 2/2/2015
HOUSTON (AP) — Food supply company Sysco said it would sell 11 distribution centers to Performance Foods Group in order to alleviate Federal Trade Commission concerns over its pending $3.5 billion acquisition of rival U.S. Foods.
Sysco Corp. agreed to buy U.S. Foods in December 2013. The FTC is still reviewing the transaction.
Its shares fell about 1.5 percent in midday trading Monday.
Sysco President and CEO Bill DeLaney said in a statement on the distribution center plans that it has worked over the past year with the FTC to help them better understand the highly competitive U.S. foodservice distribution industry and the customer benefits that would result from the deal.
“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,” he said.
Sysco said it would sell 11 U.S. Foods distribution centers located in Corona, Calif.; Denver; Kansas City; Phoenix; Salt Lake City; San Diego; San Francisco; Seattle; Cleveland; Las Vegas and Minneapolis.
The sale is contingent of getting government approval of the deal for U.S. Foods, which is based in Rosemont, Illinois. Performance Foods Group is based in Richmond, Virginia.
Sysco, which is based in Houston, said that after selling the facilities, it estimates it will still have annual savings of at least $600 million in four years.
Sysco also reported its second-quarter results on Monday, posting an adjusted profit of 41 cents per share on revenue of $12.09 billion. Analysts surveyed by Zacks Investment Research expected a profit of 41 cents per share on revenue of $11.95 billion.
Its shares fell 57 cents, or 1.5 percent, to $38.60 in midday trading.
