Food distributor Sysco Corporation has called off its proposed merger with US Foods, after the US District Court in Washington, D.C ruled against the $3.5bn deal.
Last week, the court issued a preliminary injunction to halt the proposed merger as America's Federal Trade Commission (FTC) filed a lawsuit to suspend the Sysco-US Foods amalgamation, which would result in higher prices and worse service for restaurants, hospitals, hotels, schools and other food service customers.
The termination of the merger results in the cancelation of an agreement with Performance Food Group (PFG) to purchase US Foods facilities in 11 markets.
As per the agreed terms, Sysco has to pay $300m in pay break-up fees to US Foods and $12.5m to PFG as it has decided to end the merger agreement.
Sysco president and CEO Bill DeLaney said: "After reviewing our options, including whether to appeal the Court's decision, we have concluded that it's in the best interests of all our stakeholders to move on.
"We believed the merger was the right strategic decision for us, and we are disappointed that it did not come to fruition. However, we are prepared to move forward with initiatives that will contribute to the success of Sysco and our stakeholders."
Sysco, however, plans to continue to drive earnings through commercial and supply chain initiatives, including category management and revenue management in its core business, as well as pursuing cost-saving opportunities.
