Judge calls off Sysco-US Foods merger

A federal judge has granted the Federal Trade Commission's request for a preliminary injunction to halt Sysco's merger with US Foods.

In a prepared statement, Sysco CEO Bill Delaney said the company would “take a few days to closely review the court’s ruling,” but did not rule out the possibility of ending the merger attempt.

“We will provide additional clarity in the coming days,” Delaney said.

US foods said during the legal proceedings that it would not pursue the $8.2-billion deal if the ruling went against a merger.

The decision, handed down Tuesday evening, says the deal would concentrate 75 percent of foodservice distribution in the hands of a combined Sysco's-US Foods.

Sysco and some third parties have vehemently contested that assertion. Sysco executives noted at today’s FARE conference, for instance, that there are 16,000 broadline distributors in the United States serving 1 million foodservice outlets, and asserted that competition would remain brisk after a deal.

Sysco, the industry’s No. 1 distributor, had been pursuing a merger with No. 2 US Foods for about two years. The FTC filed a lawsuit in February to block the deal.

The decision handed down by Judge Amit Mehta is a preliminary ruling. It essentially blocks the deal until additional legal efforts are successful in overturning it.