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Indiana joins Feds in reviewing merger of Sysco, US Foods

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Sysco Corp.’s agreement to buy US Foods for $3.5 billion is being reviewed for its effect on competition by federal and regulators in some states, including Indiana..

Houston-based Sysco, with annual revenue of about $44 billion, is the top operator in the U.S. food distribution business. Adding No. 2 US Foods would create a corporation in charge of at least a quarter of the $235 billion North American market.

The companies’ deal, announced last month, will be reviewed by the Justice Department’s antitrust division or the U.S. Federal Trade Commission, said Gina Talamona, a Justice Department spokeswoman. A decision hasn’t been made about which agency will conduct the investigation, she said Thursday.

Indiana Attorney General Greg Zoeller also is looking at the deal, said Bryan Corbin, his spokesman.

“We are aware of the merger and are working with other states as we examine the potential impact in Indiana,” Corbin said. He declined to identify any other states involved or comment on details of the review.

In a prepared statement, Florida also said it was participating in a "multistate group that is currently reviewing this merger."

Sysco is already North America’s biggest distributor of food to restaurants. Rosemont, Ill.-based US Foods would add brands including Cattleman’s Selection meat and Devonshire desserts. The combined companies would have about $65 billion in annual sales.

In announcing their agreement to combine businesses, Sysco and closely-held US Foods said the merger would create a “world class foodservice company.”

US Foods operates a large distribution center in Fishers. Sysco has a large warehouse at 4000 W. 62nd St., in Indianapolis.

Sysco has obtained a $4.75 billion financing commitment from Goldman Sachs Group Inc. to fund the transaction. It’s paying $3 billion in common stock and $500 million in cash to US Food owners including private-equity firms KKR & Co. and Clayton, Dubilier & Rice LLC.

Charley Wilson, a spokesman for Houston-based Sysco, said in an e-mailed statement that the company knew the review was under way.

“We are aware that several states have asked to participate in the antitrust review process,” he said. “This is common practice in mergers involving companies that operate in several geographic areas.”

Sysco operates in a “highly competitive and fragmented space,” he said. Merging with US Foods will enable Sysco to take “meaningful cost” out of the system, making the company more competitive, he said.

Lisa Lecas and Michelle Calcagni, spokeswomen for US Foods, didn’t immediately respond after regular business hours to e-mail messages seeking comment on the review.

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  • jobs?
    How will this merger affect the local labor? Will it bring layoffs of drivers or warehouse employees?

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  1. How much you wanna bet, that 70% of the jobs created there (after construction) are minimum wage? And Harvey is correct, the vast majority of residents in this project will drive to their jobs, and to think otherwise, is like Harvey says, a pipe dream. Someone working at a restaurant or retail store will not be able to afford living there. What ever happened to people who wanted to build buildings, paying for it themselves? Not a fan of these tax deals.

  2. Uh, no GeorgeP. The project is supposed to bring on 1,000 jobs and those people along with the people that will be living in the new residential will be driving to their jobs. The walkable stuff is a pipe dream. Besides, walkable is defined as having all daily necessities within 1/2 mile. That's not the case here. Never will be.

  3. Brad is on to something there. The merger of the Formula E and IndyCar Series would give IndyCar access to International markets and Formula E access the Indianapolis 500, not to mention some other events in the USA. Maybe after 2016 but before the new Dallara is rolled out for 2018. This give IndyCar two more seasons to run the DW12 and Formula E to get charged up, pun intended. Then shock the racing world, pun intended, but making the 101st Indianapolis 500 a stellar, groundbreaking event: The first all-electric Indy 500, and use that platform to promote the future of the sport.

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