Sysco Corp. said Nelson Peltz and Josh Frank, both of Trian Fund Management LP, will join its board, a move that comes less than week after the activist investor disclosed a 7% stake in the food distributor.

Sysco has faced investor pressure to accelerate its overhaul in the wake of its abandoned merger plans with US Foods Inc. The company has been hurt by competition from smaller, specialty distributors and wholesale stores, such as Restaurant Depot.

The appointments, which are effective Friday, increase the board size to 12.

Trian said last week that it wanted a seat on the board and added Sysco should run its business more efficiently and better align management's compensation with performance. The fund is now Sysco's largest shareholder, according to FactSet.

Houston-based Sysco, which delivers food and supplies to restaurants and other eateries, recently dropped its plans to merge with US Foods following a judge's ruling against the deal on antitrust grounds.

The $3.5 billion merger was in the works for about 18 months, eating up Sysco's time and money as it prepared to fight the Federal Trade Commission in court and move ahead with integration planning. In the latest quarter, Sysco logged $430 million in merger-related costs, contributing to a 71% decline in profit.

Sysco is in the midst of piecing together a new strategy, which it has said will involve internal cost-cutting. It also plans to update its technology and product assortment to compete with rivals that have better online ordering and a wider selection of natural and local foods.

Sysco, the nation's largest food distributor, has struggled with increased competition from smaller rivals in recent years. The main appeal of the planned acquisition of US Foods was to create savings with its larger scale that would help reverse a yearslong trend of declining profit margins.

Write to Josh Beckerman at josh.beckerman@wsj.com

 

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(END) Dow Jones Newswires

August 20, 2015 17:45 ET (21:45 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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