The merger date of Sysco Corp. and US Foods Inc. has been extended by 60 days from March 8 to May 7 because of the scheduled anti-trust hearings to be held in May, said food distributor Sysco in a filing with the US Securities Exchange Commission.
Sysco anticipates court hearings which are to begin on May 5 on an anti-trust lawsuit filed against the merger of the US' two largest food distributors by the Federal Trade Commission (FTC).
Sysco attorney Richard Parker had suggested in February that FTC's case would hold water only if a federal judge ruled a stay to the merger. If FTC won, the two companies would have their hands full in overcoming the lawsuit.
Due to this extension the merger worth $8.2bn would only be closing after 17 months.
The FTC fears the emergence of a single giant company controlling 75% of the distribution market, out of this merger. The two combined companies would own 133 distribution centres with Performance Food Group, the next largest distributor, having only 33 centres, claims FTC's lawsuit.
Sysco and US Foods argue for the merger, which will allow a competitive market with lower prices, as there are several other regional competitors.
Experts are of the opinion that the merger will give rise to a national competitor, which could even be Performance Food Group, as it has already offered to purchase 11 facilities for $4.6bn from the merged Sysco-US Foods, provided the merger happens.
United States District Judge Amit Mehta had set dates from May 5-8, keeping in hand three more days if required.
After the hearing, if Judge Mehta approves FTC's injunction, the case will go back to the commission for a hearing with an FTC judge on July 21.
September 8 being the final date of the original agreement, either Sysco or US Foods can take an extension of 60 days every time the deadline comes up.
