Sysco Buys US Foods for $3.5 Billion

Sysco, with annual revenue of about $44 billion, is the largest operator in the U.S. food distribution business, with US Foods in the No. 2 spot.

Sysco Corp. announced Monday it would buy Rosemont, Ill.-based US Foods Inc. for about $3.5 billion in a deal that will combine the top two U.S. food distributors and create a company making up at least a quarter of the $235 billion North American industry that distributes foods to restaurants, hotels, hospitals, schools and other institutions. 

Sysco shares jumped 25 percent to a record high on Monday, touted the combination of its supply chain expertise with the strong consumer-facing technologies of US Foods as a key driver for the deal, which creates a company with revenue of $65 billion. Sysco, which will assume US Foods' debt of $4.7 billion, also said it expected about $600 million in annual cost savings within three to four years.

The Federal Trade Commission (FTC), which rules on antitrust matters, still has a chance to scrutinize the deal. The plan to close the deal in the third quarter indicates the companies know they will have tough meetings with regulators, according to some experts. 

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