Sysco president and chief executive officer, Bill DeLaney, will lead the combined company, which retain only the name Sysco and stayed at its Texas headquartered. U.S. Foods headquarters is in Illinois.
According to his research, Manzi believes the Seabrook expansion may be off since mergers of this magnitude usually bring significant consolidations of assets to make the merger work financially.
“From what I read, with this merger they’re looking to make $600 million in back end savings,” Manzi said. “That kind of savings means the consolidation of locations and the elimination of jobs and redundancies. Sysco has a distribution center right over the border in Maine, and one in (Massachusetts), that could mean that U.S. Foods Peabody warehouse will close.”
According to the announcement: “Sysco will establish a team comprising members of both companies to prepare for and oversee a comprehensive integration for employees, customers and suppliers.”
However, given that Sysco and U.S. Foods are ranked one and two in the nation’s food distribution network, Manzi said the Federal Trade Commission will have to review the merger and approve it to ensure it doesn’t create a monopoly. Nationally, the FTC rules on antitrust issues such as this.
Sysco operates 193 distribution facilities in the U.S., Canada, the United Kingdom, and Ireland serving approximately 425,000 customers with 48,100 employees. US Foods has 24,000 employees nationwide, with 60 distribution centers in 37 states.
The two companies distribute food anywhere food is sold or served for restaurants, hotels, hospitals, schools and other institutions, Manzi said. By combining the distributors ranked one and two in the nation, they will eliminate their major competitors, he said.
“The lack of competition isn’t good for pricing,” Manzi said. “That could create a real problem for the industry since there would be no where else for restaurants, hospitals and schools to go (to buy the goods they need). The FTC needs to take a really close look at this.”