Performance Food Stock Jumps On Reports Of Acquisition Interest From US Foods
Synopsis
US Foods signaled interest in pursuing a strategic combination with Performance Food in recent months; however, any deal between the companies could face regulatory scrutiny, according to a Bloomberg News report.
Performance Food Group’s (PFGC) shares surged 10% in premarket trading on Friday after reportedly receiving a takeover interest from US Foods Holding Corp (USFD), a potential deal that would create a food distribution company with combined sales of roughly $100 billion.
US Foods has been evaluating an acquisition of Performance Food and expressed interest in a potential combination in recent months, according to a Bloomberg News report, citing people familiar with the matter.
US Foods shares fell 1.3% in premarket trading. Retail sentiment around the stock improved to ‘extremely bullish,’ from ‘bullish’ a day ago, with chatter being ‘high,’ according to Stocktwits data.
The retail sentiment on Performance Food’s, on the other hand, improved to ‘bullish,’ from ‘neutral’ a day ago, Stocktwits data showed.
Performance Food and US Foods serve a wide range of products, including fresh produce, meats, seafood, and dairy, to restaurants, schools, and hotels.
The report said that any deal between the companies could face regulatory scrutiny and that there was no certainty that the deliberations would lead to a transaction.
US Foods had a market capitalization of $18.57 billion as of last close, while Performance Food’s had a value of $14.12 billion.
In 2013, Sysco Corp (SYY) agreed to buy US Foods for $8.2 billion in a bid to consolidate its position as a leading national foodservice distributor. However, the Federal Trade Commission (FTC) moved to block the merger, citing antitrust concerns that it could stifle competition and drive up prices.
To address regulatory objections, Sysco proposed divesting 11 US Foods distribution centers to Performance Food Group. But in 2015, a federal judge ruled in favor of the FTC, issuing an injunction that halted the transaction.
Sysco subsequently terminated the deal and paid US Foods a $300 million breakup fee.
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