Twinsburg Township — Sysco Corp. has proposed the sale of a US Foods distribution center on Bavaria Road, one of 11 centers Sysco has proposed to sell to rival Performance Food Group Co. to gain the Federal Trade Commission’s blessing for a $3.5 billion merger between Sysco and US Foods, Sysco announced Feb. 2.
Sysco, of Houston, Texas, in December 2013 agreed to buy Rosemont, Ill.-based US Foods, which has a 180,000-square-foot facility at 8000 Bavaria Road, one of Twinsburg Township and the village of Reminderville’s biggest taxpayers in the shared Joint Economic Development District.
The FTC has not yet signed off on the merger, according to Sysco officials.
“Over the past 12 months, we have worked in good faith with the FTC to help them better understand the highly competitive U.S. food service distribution industry and the significant customer benefits that will result from the merger of Sysco and US Foods,” Sysco president and CEO Bill DeLaney said in the Feb. 2 release.
“Unfortunately, the FTC has taken a different view of the potential competitive impacts of the merger. While we respectfully but vigorously disagree with the FTC’s analysis, we believe this divestiture package fully addresses its concerns.”
The potential sale from Sysco to Performance is “better than the alternative” for Twinsburg Township, according to township manager Rob Kagler.
Since Sysco already has a location on the west side of Cleveland on Granger Road, the two locations could have merged and left an empty building in the JEDD.
“This is better than the alternative with this [potential] merger,” Kagler said. “Having the building sold and still operated is a good thing. We had a 50-50 chance of having an empty building there. US Foods is a company with one of the highest number of jobs in the JEDD.”
A US Foods representative would not divulge the exact number of employees at the Bavaria Road location.
In a news release, Sysco said the US Foods distribution centers to be sold have combined annual revenue of $4.6 billion. After selling these facilities, Sysco estimates it still will be able to achieve net annual synergies of at least $600 million in four years.
In addition to the Twinsburg Township center in the Joint Economic Development District, Sysco plans to sell US Foods facilities in Corona, Calif.; Denver; Kansas City, Kan.; Las Vegas; Minneapolis; Phoenix; Salt Lake City; San Diego; San Francisco; and Seattle.
Sysco said in the release that it has agreed on a “multi-year transition services agreement” to ensure a smooth transfer of assets from US Foods to Richmond, Va.-based Performance Food Group “by providing various support services and personnel to help Performance Food Group succeed as the new business owner in these locations.”
“Hopefully the transition will be seamless,” Kagler added of the Bavaria Road facility.
Performance Food CEO George Holm said in the Feb. 2 release that the new distribution centers would enable Performance company to compete for national food service customers.
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