Will Sysco (SYY) Stock be Impacted by US Foods Merger Block?

NEW YORK (TheStreet) -- On Tuesday, a federal judge ruled that Sysco Corp (SYY) cannot merge with its largest competitor, US Foods, without approval from antitrust regulators.

"While we respect the court's decision, we are profoundly disappointed with this outcome. We diligently pursued this transaction for nearly two years because we strongly believed the merger of Sysco and US Foods would be procompetitive and good for customers, associates and shareholders," Sysco CEO Bill DeLaney said in a statement.

In February, the FTC sued to stop Sysco's $3.5 billion offer to buy US Foods, CNBC.com reports. The Federal Trade Commission believes the merger would be anticompetitive as Sysco and US Foods control 75% of that market.

"The Federal Trade Commission has shown that there is a reasonable probability that the proposed merger will substantially impair competition in the national customer and local broadline markets and that the equities weigh in favor of injunctive relief," Judge Amit Mehta said, CNBC.com noted.

Sysco said it understands the court's decision and is "developing plans" to move the business forward. Sysco will continue to review the ruling and "access our legal and contractual obligations." The company said it will also examine the "merits of terminating the merger agreement."

Shares of Sysco are down by 0.03% to $37.59 in pre-market trading on Wednesday morning.

Separately, TheStreet Ratings team rates SYSCO CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

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