By Brent Kendall
WASHINGTON--The Federal Trade Commission on Thursday sued to
block Sysco Corp.'s planned acquisition of rival US Foods Inc., a
long-awaited move that sets the stage for a major antitrust battle
in court.
The FTC, in a 3-2 vote, alleged the proposed tie up of the
nation's two largest food distributors would create a dominant
national foodservice distributor that could raise prices and reduce
service for customers.
The two companies provide food and related supplies to
restaurants and other institutions like hospitals and schools.
Post-merger, the combined companies were expected to generate more
than $65 billion in annual revenue. Sysco and US Foods have said
the $3.5 billion merger would allow them to improve service and
achieve hundreds of millions of dollars in cost savings.
The commission had been investigating the merger for more than a
year. Lengthy settlement talks between the two sides failed to
produce an agreement to allow the merger. Sysco recently offered to
address FTC concerns about competition by selling off a large
package of assets that generate $4.6 billion in annual revenue, far
above its original $2 billion divestiture commitment.
Write to Brent Kendall at brent.kendall@wsj.com
Access Investor Kit for Sysco Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US8718291078
Subscribe to WSJ: http://online.wsj.com?mod=djnwires