Business

Sysco-US Foods Merger May Raise Antitrust Concerns

The proposed merger of Houston-based Sysco with US Foods would combine the nation’s two largest food service distributors. The deal may pose more challenges than Houston-based Sysco is letting on.

The merger would create a company, bearing Sysco’s name, with annual sales of roughly $65 billion. Lou Whiteman is senior writer at financial news service The Deal. He says the size and reach of the new company could raise antitrust concerns.

“I think there is some risk there. I think the company is downplaying that risk.”

If the deal wins approval from the Federal Trade Commission, the new Sysco board will include representatives from US Foods’ current owners — private equity firms Clayton Dubilier & Rice and Kohlberg Kravis Roberts.

“As long as Sysco executes well, they can be good partners. But if things go poorly, these are investors that tend to have a limited amount of patience.”

Sysco will pay $3 billion in common stock and $500 million in cash for control of US Foods. It will also assume or refinance the smaller company’s net debt, estimated at $4.7 billion.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas delegations in the U.S. House and Senate, as well as the Texas governorship, the state legislature, and county and city governments. Before taking up his current post, Andrew...

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