Sysco’s plan to merge U.S. Foods with itself hasn’t been successful. The $3.5 billion merger was announced by the corporation back in December 2013. The core strategic plan released by the Sysco has dismissed all possibilities of the mega merger. US Foods are biggest competition in ready-made eatable section for Sysco. The combined market share of both corporations would have been unbeatable.
The cost of Sysco products could have reduced and customers would have received more benefit if deal was final. Sysco reported annual revenue of $46.5 billion last year. The merger would have added additional $20 billion from US Foods. The strong mega company would have controlled around 25 percent market share in the world’s largest economy. The government data also informed that the market share is bigger in some states.
The company was preparing for the merger since long time but destruction of the deal has affected working of Sysco. US Food must receive more than $300 million as a breakup fee from Sysco. The company officials also said that tasks like legal support, integration plan and other merger related duties has cost additional $355 million to the company treasury.
$12.5 million breakup fee would be paid by Sysco to Performance Food Group now to terminate an agreement. The company was planning to sell some US Foods property to the group. John Lederer, Chief Executive Officer of US Food responded that the latest improvements in company would take it to next level. The trucks and warehouse now have latest technology installed.