NEW YORK (The Deal) -- A federal district judge Tuesday granted the Federal Trade Commission's request for a preliminary injunction suspending Sysco Corp.'s (SYY) ability to close its proposed $8.2 billion acquisition of US Foods.
Although the decision only bars closing of the deal while the FTC conducts a separate in-house trial to determine the transaction's permanent fate, the companies have said the merger would be terminated if the preliminary injunction was granted.
FTC Competition Bureau Director Debbie Feinstein praised the ruling by U.S. District Judge Amit Mehta for preserving competition in local and national broadline food-service distribution markets. If allowed to close the deal "would lead to higher prices and diminished service for customers, including restaurants, hospitals, hotels and schools," Feinstein said.
In his own statement, Sysco CEO Bill DeLaney said that while "we respect the court's decision, we are profoundly disappointed with this outcome."
As for the merger, the chief executive added, "Nevertheless, we certainly understood this outcome to be possible and have been developing plans for the business moving forward. We will take a few days to closely review the Court's ruling and assess our legal and contractual obligations, including the merits of terminating the merger agreement."
With no final word yet from the companies on killing the deal, Feinstein said the FTC looked forward to proving the merger's harmful effects at trial. Mehta filed his opinion under seal and his order granting the preliminary injunction stated only that the FTC "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."
Mehta presided over a hearing for the FTC's preliminary injunction request last month.