FTC Weighing Antitrust Lawsuit Against Sysco, US Foods Merger: WSJ

(RTTNews) - The Federal Trade Commission is weighing an antitrust lawsuit against the $3.5 billion merger of Sysco Corp. (SYY) and US Foods Inc. on concerns that the combination could threaten competition, the Wall Street Journal reported, citing people familiar with the matter.

Both companies buy food and supplies such as napkins and cutlery from manufacturers and sell to restaurants, schools and other institutions. The combination makes up over 25 percent of the $231 billion U.S. food-distribution industry.

The companies believe that the merger, announced in December 2013, will help them reduce costs, enhance purchasing power and improve customer service.

The FTC has been investigating the merger for several months. The regulator is considering options such as divestment of assets to competitors by both firms.

The commission is yet to decide whether to challenge the deal and a decision may come within weeks.

SYY closed down 1.1 percent on Monday at $37.56, and slid 1.5 percent in the extended trade.