Foods distributor Sysco SYY -3.36% said on Monday it would terminate a $8.2 billion acquisition of private equity-owned competitor US Foods, undoing what was a closely followed deal that may also have wider ramifications on merger and acquisition activity on Wall Street. The deal’s cancellation comes just days after a federal judge granted the Federal Trade Commission’s request for an injunction on antitrust grounds.
In December 2013, private equity firms KKR & Co. and Clayton, Dubilier & Rice agreed to sell privately held US Foods to Sysco for $3.5 billion, or an enterprise value of roughly $8.2 billion, a merger that would have combined the two largest foods distributors in the United States. However, this year, the FTC objected to the merger, arguing the combined company would control roughly 75% of the foodservice marketplace.
The FTC called for an injunction, stating that the merger would lead to higher prices and diminished service for the restaurants, hotels and schools that contract food distributors. State attorneys general in California, Illinois, Iowa, Maryland, Minnesota, Nebraska, Ohio, Virginia, Pennsylvania, Tennessee, North Carolina, and the District of Columbia joined the FTC in its complaint this February.
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