Sysco To Buy U.S. Foods

Two mammoth U.S. food distributors are set to become one. Sysco agreed on Monday to buy U.S. Foods for about $3.5 billion in stock and cash, setting Sysco up to be the biggest player in the industry.

Copyright © 2013 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

STEVE INSKEEP, HOST:

The biggest player in food distribution is gobbling up a rival.

RENEE MONTAGNE, HOST:

Sysco, which supplies places such as restaurants and hospitals, is planning to buy U.S. Foods in a deal worth more than $8 billion. If approved by regulators, this could turn Sysco into a distribution colossus.

NPR's David Schaper has more.

DAVID SCHAPER, BYLINE: Sysco is already the continent's largest distributor of food, owning 18 percent of the North American market. You've probably seen their trucks delivering everything from mayonnaise and pickles to cups and napkins at restaurants.

Now, Houston-based Sysco is about to get a lot bigger, announcing it has agreed to buy the number two food distributor, suburban Chicago-based U.S. Foods.

Sysco CEO Bill Delaney lauded the merger in an online promotional video.

BILL DELANEY: As we move forward as one company, we believe we have the opportunity to create a world-class food service distribution company.

SCHAPER: U.S. Foods CEO John Lederer is featured in the video, too.

JOHN LEDERER: Our combined strengths are highly complementary.

ERIN LASH: You know, the deal is sizable.

SCHAPER: Morningstar analyst Erin Lash.

LASH: The combined organization will control just under 30 percent of the North American food services distribution market.

SCHAPER: Lash says one company cornering that much of the market will likely raise antitrust concerns at the Federal Trade Commission.

LASH: That said, it still is a highly fragmented market. There's about 15,000 to 16,000 distributors that service the North American food service distribution space overall.

SCHAPER: Many of those are small, regional distributors that Lash and other analysts say still should be able to compete against a much bigger Sysco for their piece of the $235 billion food distribution pie.

David Schaper, NPR News.

Copyright © 2013 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.