Sysco drops plan to merge with US Foods
Cancellation of the deal means Sysco will have to pay a $300 million break-up fee to US Foods and another $12.5 million to a second company, which had agreed to buy 11 facilities that Sysco hoped to sell in order to satisfy U.S. antitrust regulators.
The Federal Trade Commission filed a lawsuit to block the deal in February, and a U.S. federal judge ruled in the agency's favor last week.
"We have concluded that it's in the best interests of all our stakeholders to move on," Bill DeLaney, Sysco president and chief executive officer, said in a statement. "We believed the merger was the right strategic decision for us and we are disappointed that it did not come to fruition."
In a call with investors, DeLaney indicated that the company's appetite for deals had not abated. "We definitely believe that there is plenty of acquisition opportunity out there," he said.
Sysco's shares were down 2.1 percent in late morning trading on Monday, at $37.54.
Sysco has also decided to spend $3 billion over the next two years to buy back shares, in addition to share purchases it already does, the company said. "Sysco will continue to assess the merits of repurchasing shares over time," it said in a statement.
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