Rosemont, Illinois, U.S.A.-based US Foods and Richmond, Virginia, U.S.A.-based Performance Food Group have called off the exploration process on a potential merger.
In September, the two major food distribution companies said they planned to exchange confidential information related to a potential merger.
“US Foods is pleased with PFG’s decision to engage in an effort to explore the regulatory considerations and synergies of a potential combination,” US Foods said in a release at the time. “There can be no assurance that this information sharing will result in any transaction proposal or any assurance as to its outcome or timing.”
On 24 November, the companies terminated that information-sharing process by mutual agreement and will no longer pursue a potential merger.
“We have completed our thorough analysis, including synergies and regulatory considerations, of the potential benefits of a combination with PFG. While we are pleased to have engaged in this exploratory process together, our board of directors and the executive leadership team have determined that it is in the best interest of US Foods and its shareholders to terminate discussions regarding a potential combination,” US Foods CEO Dave Flitman said. “We have concluded that our best path to long-term value creation is executing our long-range plan, including our disciplined capital allocation framework.”
Flitman also said that from the beginning of the exploration process, US Foods never wavered in the fact that it had the ability to deliver on its growth plans as a standalone company.
To that end, US Foods has reiterated its fiscal year 2025 outlook and its plan of achieving a 5 percent net sales compound annual growth rate (CAGR) from 2025 to 2027.
US Foods also announced a planned USD 250 million (EUR 217 million) accelerated share repurchase (ASR) agreement under its current authorization, as well as a board of directors-approved USD 1 billion (EUR 868 million) share repurchase authorization on a longer timeline.
Those initiatives “underscore our focus on creating long-term shareholder value, the confidence we have in our future, and the acceleration of our operating cash flow,” Flitman said.
PFG similarly emphasized its ability to operate as a standalone company in the wake of the terminated exploration process.
“Our board of directors is unanimous in its belief that the clearest and best path to long-term stockholder values is executing our standalone strategic plan, leveraging our diverse business segments to drive consistent revenue and profit growth,” PFG Chair and CEO George Holm added in a separate release. “The strength of our recently reported fiscal first quarter results and continued momentum supports the confidence in our ability to drive value for stockholders independently.”
Even if US Foods and PFG had agreed to merge, it was not a guarantee that the Federal Trade Commission would have approved it.
In 2015, Houston, Texas, U.S.A.-based Sysco canceled a planned merger with US Foods after the Federal Trade Commission blocked the merger.
“The FTC alleged that if the merger goes forward as proposed, foodservice customers, including restaurants, hospitals, hotels, and schools, would likely face higher prices and lower levels of service than would be the case but for the merger,” the FTC said at the time. “A combined Sysco/US Foods would account for 75 percent of the national market for broadline distribution services. In addition, the parties would also hold high shares in a number of local markets.”
A decade on from that failed merger, Sysco is performing well as a standalone company, as evidenced by an overall sales increase of 3.2 percent within its first fiscal quarter of 2026.
As a result of the strong quarter and trends observed in October, Sysco has expressed confidence in maintaining its fiscal 2026 guidance, projecting sales growth of 3 percent to 5 percent and adjusted earnings per share growth of 1 percent to 3 percent, Sysco CFO Kenny Cheung said.
