US Foods Eyes $100B Merger with Performance Food Group

US Foods Holding Corp. is reportedly exploring a takeover of Performance Food Group Co., a move that would create the largest food service distributor in the U.S. with combined annual sales of approximately $100 billion, according to sources familiar with the matter.

The talks remain private and nonbinding, and there is no guarantee a deal will materialize.

A Merger That Could Reshape Food Distribution

According to Bloomberg Intelligence, a US Foods–Performance Food deal would create a food distribution leader with:

• 18% of the U.S. foodservice market (vs. Sysco’s 17%)
• A diversified footprint across restaurants, schools, convenience stores, and hospitals
• Complementary strengths — Performance Food’s reach in independent pizzerias, candy, and snacks could help US Foods fill critical gaps

“A deal would create meaningful scale and synergies,”
— Michael Halen, Bloomberg Intelligence Senior Analyst

Market Reaction: Stock Gains Reflect Deal Optimism

• Performance Food Group shares rose 5.1% on July 11, hitting an all-time high and closing with a $14.7 billion market cap
• US Foods stock climbed 1.2%, valuing the company at $18.8 billion

The rise in share prices reflects optimism from investors about potential efficiencies and market dominance. However, analysts warn of short-term pressure on US Foods’ EBITDA margins, even if long-term synergies are realized.

Operational Scale and Overlap

• US Foods generated $37.9 billion in revenue last year, operating in over 70 locations with 30,000 employees
• Performance Food serves the U.S. and Canada via three divisions:
  • Performance Foodservice (restaurant supply)
  • Vistar (snacks and candy)
  • Core-Mark (convenience store distribution)

Antitrust Considerations: Lessons from Sysco–US Foods Block

A similar consolidation attempt occurred in 2015, when Sysco’s proposed $3.5 billion acquisition of US Foods was blocked by a federal judge on antitrust grounds. That decision cited potential harm to competition in the national food distribution market.

“Any increase in leverage would be temporary,”
— Julie Hung, Bloomberg Intelligence Senior Credit Analyst

Analysts suggest that US Foods may use equity to minimize debt pressure, but even so, the deal would likely face intense regulatory scrutiny given its potential to reduce market competition.

What It Means for the Freight Sector

A merger of this scale would not only shift retail food distribution dynamics but also impact freight operations in multiple ways:

• Consolidation of freight networks could result in route optimization and cost savings
• Supplier negotiations and freight volumes could change across LTL, dry van, and reefer markets
• Regulatory delays may create uncertainty in freight planning and procurement cycles for third-party logistics firms and carriers aligned with either company

Outlook

The proposed deal, if successful, would establish a new industry leader in U.S. food distribution, surpassing Sysco and reshaping a $371 billion market. But antitrust regulators may once again play the deciding role.

Until a formal offer is made, stakeholders across retail, freight, and logistics will be watching closely for developments, particularly those that could affect distribution volume, contract logistics, and supply chain complexity.

Source: Transport Topics