Performance Food Group, US Foods end merger talks

PFGC +2.16% USFD +1.40% SYY +1.59%

Performance Food Group and US Foods have ended talks that would have created the largest domestic foodservice company and one of the nation’s largest private fleets.

Both companies operate more than 6,000 tractors. A combination would have created the biggest food distributor in the U.S. with over $100 billion in annual net sales. Richmond, Virginia-based Performance Food Group (NYSE: PFGC) has approximately 155 distribution centers and Rosemont, Illinois-based US Foods (NYSE: USFD) has over 70.

The combined market capitalization would have been north of $30 billion, rivaling the largest food distributor, Houston-based Sysco (NYSE: SYY), which has a $36 billion market cap.

Sysco generates over $80 billion in net sales annually through its 337 distribution centers in 10 countries. It has a fleet of over 19,000 delivery vehicles.

“Our Board of Directors is unanimous in its belief that the clearest and best path to long-term stockholder values is executing our standalone strategic plan, leveraging our diverse business segments to drive consistent revenue and profit growth,” said PFG Chairman and CEO George Holm in a news release. “The strength of our recently reported fiscal first quarter results and continued momentum supports the confidence in our ability to drive value for stockholders independently.”

PFG reaffirmed its full-year fiscal 2026 guidance of $67.5 billion to $68.5 billion in net sales and adjusted EBITDA in a range of $1.9 billion to $2.0 billion.

US Foods approached PFG about a deal in July. Activist investor Sachem Head Capital Management pushed PFG to explore a merger with US Foods in early September. The two private carriers announced an information-sharing agreement two weeks later.

“We have completed our thorough analysis, including synergies and regulatory considerations, of the potential benefits of a combination with PFG. While we are pleased to have engaged in this exploratory process together, our Board of Directors and the Executive Leadership Team have determined that it is in the best interest of US Foods and its shareholders to terminate discussions regarding a potential combination,” said US Foods CEO Dave Flitman.

US Foods reiterated its fiscal 2025 outlook and a longer-range plan that calls for 5% net sales growth annually, with adjusted EBITDA growth of 10%. It also announced a new $1 billion share repurchase agreement in addition to a $250 million accelerated share repurchase plan.

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