Sysco Files Memorandum Opposing FTC's Motion To Block Merger With US Foods

(RTTNews) - Sysco Corp. (SYY) said Wednesday that it filed a memorandum opposing the U.S. Federal Trade Commission's or FTC effort to block its proposed merger with US Foods.

Sysco filed the memorandum Tuesday 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.

At the hearing, the company intends to emphasize that A market for broadline foodservice distribution services for "national customers" does not exist; Local markets are highly competitive; Synergies will reduce Sysco's annual costs by at least $600 million; robust, binding divestiture package with Performance Food Group creates a stronger competitor.

In February 2015, Food-distribution giant Sysco Corp. (SYY) said that it would challenge the Federal Trade Commission's attempt to block its proposed $3.5 billion merger with US Foods, Inc. that would create a combined entity with annual revenues of $65 billion.

The antitrust regulator had filed an administrative complaint charging that the proposed merger between two of the largest broadline foodservice distributors in the U.S. would violate the antitrust laws by significantly reducing competition nationwide and in 32 local markets.

FTC had stated in the complaint that the merged entity would account for 75 percent of the national market for broadline distribution services. FTC added that the entity would also hold high shares in a number of local markets.

Houston, Texas-based Sysco agreed in December 2013 to acquire closely held US Foods for $3.5 billion in cash and stock. With the assumption of US Foods' debt, the deal is valued at about $8.2 billion.