Sysco's deal to Purchase 'US Foods' pushed into 2015
Sysco Corp, the country's biggest food distributor to restaurants, said on Monday that the net profit surpassed expectations during its fiscal first quarter. The company also said that its purchase of US Foods, one of the USA's leading distributors, won't close this year as had been projected.
The reason behind the Federal Trade Commission closely reviewing the deal is the two companies are the only ones that have geographic reach to offer nationwide contracts for a wide range of goods to customers ranging from hotel chains to fast food restaurants.
Sysco employs about 225 people in the Longview area and is the nation's largest food distributor. US Foods is No. 2 and is one of the USA's leading distributors with about $19 billion in annual revenue. It is also the 10th largest private company in America.
Houston-based Sysco said in December that it was purchasing US Foods for about $3.5 billion and also said that it expected to complete the deal in the third quarter of this year. Afterwards, company said that it might close to the fourth quarter and now is pushed into 2015.
'Given the amount of work remaining, and considering the upcoming holidays, the company does not currently expect to complete the transaction before the first quarter of 2015', CEO Bill DeLaney said in a statement. According to Sysco, it earned $278.8 million or 47 cents per share, down from $285.6 million, or 48 cents per share, a year ago.
The company earned 52 cents per share, excluding items. The revenue increased by 6.2% to $12.45 billion.
According to Zacks Investment Research, analysts estimated net income of 50 cents per share and $12.36 billion in revenue.
DeLaney said that they are satisfied with the solid operating performance that they provided in their first fiscal quarter amid challenging market conditions. From the beginning of the year, Sysco shares have increased more or less 7% and the Standard & Poor's 500 index has witnessed a rise by 9%.
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