Sysco Files Memorandum Opposing FTC's Motion to Block Proposed US Foods Merger
22 April 2015 - 10:00PM
Sysco Corporation (NYSE:SYY) filed a memorandum opposing the U.S.
Federal Trade Commission's (FTC) effort to block its proposed
merger with US Foods, a transaction that would make the U.S.
foodservice distribution industry more competitive.
Sysco filed the memorandum yesterday in the U.S. Federal
District Court for the District of Columbia in opposition to the
FTC's motion for preliminary injunction. A hearing on the FTC's
motion is scheduled to begin May 5, during which the company
intends to emphasize, at minimum, the following points:
- A market for broadline foodservice distribution
services for "national customers" does not exist. The
foodservice distribution industry is extremely competitive.
Customers of all sizes, including the industry's largest customers,
have many options from which to choose, including systems
distributors, specialty distributors, cash-and-carry stores and
broadline distributors.
- Local markets are highly competitive. The
FTC's flawed logic on the structure of the local foodservice
distribution market led to dubious analysis of market share. In one
instance, the FTC claims Sysco and US Foods would control 100
percent of the market in San Diego. In reality, more than two dozen
companies compete for customers' business in San Diego. Local
market dynamics are similar across the U.S.
- Synergies will reduce Sysco's annual costs by at least
$600 million. These savings allow the combined company to
become more efficient, invest in improved customer service and
innovative products, and reduce customer prices, all of which
contribute to an even more competitive market.
- A robust, binding divestiture package with Performance
Food Group creates a stronger competitor. The proposed
sale of facilities in 11 markets to PFG directly addresses FTC
concerns that the merger might reduce choice for customers with
locations in multiple local markets and regions.
Bill DeLaney, Sysco's president and chief executive officer,
said, "We look forward to presenting all of the facts in court and
ultimately, through this merger, delivering better service at a
lower cost through a more efficient, innovative and competitive
combined company."
About Sysco
Sysco is the global leader in selling, marketing and
distributing food products to restaurants, healthcare and
educational facilities, lodging establishments and other customers
who prepare meals away from home. Its family of products also
includes equipment and supplies for the foodservice and hospitality
industries. The company operates 194 distribution facilities
serving approximately 425,000 customers. For Fiscal Year 2014 that
ended June 28, 2014, the company generated sales of more than $46
billion. For more information, visit www.sysco.com or connect with
Sysco on Facebook at www.facebook.com/SyscoCorporation or Twitter
at https://twitter.com/Sysco.
About US Foods
As one of America's great food companies and leading
distributors, US Foods is Keeping Kitchens Cooking™ and making life
easier for customers, including independent and multi-unit
restaurants, healthcare and hospitality entities, government and
educational institutions. With approximately $22 billion in annual
revenue, the company offers more than 350,000 products, including
high-quality, exclusive brands such as the innovative Chef's Line®,
a time-saving, chef-inspired line of scratch-quality products, and
Rykoff Sexton®, a premium line of specialty ingredients sourced
from around the world. The company proudly employs approximately
25,000 people in more than 60 locations nationwide. US Foods is
headquartered in Rosemont, Ill., and jointly owned by affiliates of
Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts &
Co. L.P. Discover more at www.usfoods.com.
CONTACT: For more information:
Charley Wilson
Vice President, Corporate Communications
T: 281-584-2423
Shannon Mutschler
Vice President, Investor Relations
T: 281-584-1308
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