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Sysco To Buy U.S. Foods

STEVE INSKEEP, HOST:

The biggest player in food distribution is gobbling up a rival.

RENEE MONTAGNE, HOST:

Sysco, which supplies places such as restaurants and hospitals, is planning to buy U.S. Foods in a deal worth more than $8 billion. If approved by regulators, this could turn Sysco into a distribution colossus.

NPR's David Schaper has more.

DAVID SCHAPER, BYLINE: Sysco is already the continent's largest distributor of food, owning 18 percent of the North American market. You've probably seen their trucks delivering everything from mayonnaise and pickles to cups and napkins at restaurants.

Now, Houston-based Sysco is about to get a lot bigger, announcing it has agreed to buy the number two food distributor, suburban Chicago-based U.S. Foods.

Sysco CEO Bill Delaney lauded the merger in an online promotional video.

BILL DELANEY: As we move forward as one company, we believe we have the opportunity to create a world-class food service distribution company.

SCHAPER: U.S. Foods CEO John Lederer is featured in the video, too.

JOHN LEDERER: Our combined strengths are highly complementary.

ERIN LASH: You know, the deal is sizable.

SCHAPER: Morningstar analyst Erin Lash.

LASH: The combined organization will control just under 30 percent of the North American food services distribution market.

SCHAPER: Lash says one company cornering that much of the market will likely raise antitrust concerns at the Federal Trade Commission.

LASH: That said, it still is a highly fragmented market. There's about 15,000 to 16,000 distributors that service the North American food service distribution space overall.

SCHAPER: Many of those are small, regional distributors that Lash and other analysts say still should be able to compete against a much bigger Sysco for their piece of the $235 billion food distribution pie.

David Schaper, NPR News. Transcript provided by NPR, Copyright NPR.

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