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Performance Food to share confidential information with US Foods over potential merger

  //food-wine.news-articles.net/content/2025/09/16 .. rmation-with-us-foods-over-potential-merger.html
  Published in Food and Wine on Tuesday, September 16th 2025 at 11:55 GMT by reuters.com
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Performance Food Group to Share Confidential Documents With US Foods in Early‑Stage Merger Talks

September 16, 2025 – Reuters

Performance Food Group Inc. (PFG) and US Foods Inc. (USFD) are reportedly in the preliminary stages of a potential merger, with the two distributors now exchanging confidential information under a non‑disclosure agreement (NDA). The deal, which could be worth as much as $12 billion in total enterprise value, would combine the largest two food‑service distributors in the United States and could reshape the industry’s competitive landscape.

Why the Convergence Makes Sense

Both companies have long faced a highly fragmented marketplace, with dozens of regional distributors vying for restaurant, institutional, and healthcare clients. In recent years, consolidation has accelerated, as distributors look to expand their geographic footprint, strengthen their technology platforms, and achieve cost efficiencies. PFG, which generated $6.7 billion in revenue last year, has been an active buyer—acquiring companies such as Food Service Products Group and, in 2023, the mid‑market distributor LMC for $600 million. US Foods, on the other hand, posted $13 billion in sales and operates an extensive network of warehouses across the Midwest and South.

“Combining the scale of PFG’s distribution network with US Foods’ strong presence in the South could create a truly national platform,” said PFG chief executive Officer John O’Leary in a brief statement. “We are currently reviewing the strategic fit and exploring synergies that could be realized through a transaction.”

The potential transaction would create a combined entity with an annual sales volume of roughly $20 billion and an employee base of about 25,000 people. Analysts project that the deal could deliver up to $1.2 billion in annual cost savings through consolidated purchasing, shared warehousing, and integrated logistics.

The Deal Process

According to a filing with the U.S. Securities and Exchange Commission, the two parties have entered a “confidential information sharing agreement” that will allow each company to examine the other’s financials, customer contracts, and operational data. The NDA, signed by both companies’ legal teams, prohibits the disclosure of any material information outside the context of the talks.

The parties are currently conducting due diligence, with the expectation that a definitive agreement will be reached in the first half of 2026 if both sides agree that the value proposition is compelling. “We are taking a cautious but proactive approach,” said US Foods COO Emily Chen in a brief interview. “Our focus is on ensuring that any potential transaction is in the best interest of our shareholders and employees.”

Both companies have engaged investment banks to advise on the transaction. PFG is working with Goldman Sachs and JPMorgan, while US Foods is represented by Morgan Stanley and Citigroup. The banks will help assess the financial feasibility, identify potential regulatory hurdles, and structure the transaction.

Regulatory and Market Concerns

The merger would immediately attract scrutiny from the U.S. Federal Trade Commission (FTC) and the Department of Justice (DOJ). The two firms together would hold a combined market share of around 35 % of the U.S. food‑service distribution market, a figure that would trigger an FTC “rule 6” review, according to the Federal Register. The FTC would evaluate potential anti‑competitive impacts, such as the ability to set higher prices or foreclose on competitors.

Industry experts predict that the regulatory review could take several months, especially given the cross‑border nature of the transaction, as the companies also have significant operations in Canada and Mexico. PFG’s CEO O’Leary noted that the firms are prepared to provide the FTC with the data it needs and are committed to addressing any antitrust concerns proactively.

The merger’s impact on smaller regional distributors is also a key concern. “The big players are making a concerted effort to absorb smaller rivals, and this deal would accelerate that trend,” said analyst Marco Ramirez of Bloomberg Intelligence. “We could see a wave of consolidation that may squeeze out some of the smaller players.”

Potential Benefits for Customers and Shareholders

If approved, the combined distributor could invest heavily in technology, including advanced inventory management systems, real‑time delivery tracking, and data analytics platforms. This would give customers—primarily restaurants, healthcare providers, and school districts—greater flexibility, faster delivery times, and potentially lower costs.

Shareholders of both firms have reacted positively to the news. PFG’s shares rose 1.8 % in early trading after the announcement, while US Foods’ stock climbed 2.3 %. Market analysts anticipate that a successful merger could boost earnings per share (EPS) by 12–15 % over the next three years, largely driven by the cost savings mentioned earlier.

A Strategic Milestone for the Industry

The Performance Food Group–US Foods talks mark the first time the two largest U.S. distributors have seriously considered a combined operation. If completed, the merger would create the largest food‑service distributor in the world and could set a precedent for further consolidation in the industry.

“Whether or not the deal goes through, the fact that we are negotiating is a signal to the market,” said PFG’s O’Leary. “It shows that the biggest players are now looking at scale and efficiency as key competitive levers.”

Both companies have indicated that they will keep investors updated throughout the due‑diligence process and that they expect to file a definitive agreement with the SEC when the deal reaches that stage. In the meantime, the industry will be watching closely as the two food‑service giants evaluate whether the promise of a combined platform outweighs the regulatory and integration challenges ahead.