Sysco Corp. (SYY)’s agreement to buy US Foods for $3.5 billion is drawing antitrust scrutiny from U.S. regulators and some states that are joining the federal review over concerns the acquisition may undermine competition.
The transaction will be reviewed by the Justice Department’s antitrust division or the U.S. Federal Trade Commission, said Gina Talamona, a Justice Department spokeswoman. She said a decision hasn’t been made about which of the two will conduct the investigation.
“We are aware of the merger and are working with other states as we examine the potential impact in Indiana,” Bryan Corbin, a spokesman for Indiana Attorney General Greg Zoeller, said today in a phone interview. He declined to identify any other states involved or comment on details of the review.
Sysco and closely held US Foods announced their agreement to combine in a joint statement last month, saying it would create a “world-class food-service company.”
Houston-based Sysco was already North America’s biggest distributor of food to restaurants. Incorporating Rosemont, Illinois-based US Foods, adds brands including Cattleman’s Selection meat and Devonshire desserts. The combined companies would have about $65 billion in annual sales.
Sysco has obtained a $4.75 billion financing commitment from Goldman Sachs Group Inc. (GS) to fund the transaction. It is paying $3 billion in common stock and $500 million in cash to US Food owners including private-equity firms KKR & Co. (KKR) and Clayton, Dubilier & Rice LLC.