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Sysco and US Foods struggling to complete merger

Mergers with businesses can be highly complex. Not only are there negotiations and certain terms that must be set between the two businesses, sometimes there are also federal laws to consider. Courts may see a merger as a way of monopolizing and therefore stifling competition, leading to an unfair market. Such cases often require delicate handling and a strong legal strategy.

Many Indiana residents have likely heard of Sysco and Us Foods, two multinational corporations involved in food distribution. However, some might not be aware that the two companies have long sought to complete a $3.5 billion merger. The proposed merger has hit a number of roadblocks that the companies have struggled to overcome. The Federal Trade Commission is attempting to block the merger, claiming that the new company would have an unfair control over the market. The government claims that a Sysco and US Foods merger would have control over 75 percent of the market.

Sysco, however, presents different data. Reports say that Sysco is arguing that other companies control more of the market, 60 percent, to be exact. Part of the reason why there is such a difference in data in the dispute is that the two sides do not agree on what exactly qualifies as a competitor to the new company. Sysco considers smaller food distributors to be competitors, while the Federal Trade Commission does not.

There are many intricacies that go into mergers and acquisitions. In order to make sure all of the various intricacies are properly handled, it is often necessary to consult with a legal professional. While there are often many obstacles when attempting a merger, it can be possible to overcome these struggles with the right legal guidance.

Source: WSJ Markets, “Sysco-US Foods Merger Hinges on Judge’s Interpretation of Marketplace,” Brent Kendall, May 5, 2015