US Foods and Performance Food Group (PFG) on Tuesday agreed to share confidential information with each other, laying the groundwork for a potential merger that would create the country’s largest broadline food distributor.
“US Foods is pleased with PFG’s decision to engage in an effort to explore the regulatory considerations and synergies of a potential combination,” the Rosemont, Illinois-based company said in a statement. “There can be no assurance that this information sharing will result in any transaction proposal, or any assurance as to its outcome or timing.”
In recent weeks, Richmond, Virginia-based PFG has met with its large shareholders, as well as with US Foods officials, to discuss “how the two companies could most effectively explore a potential business combination while safeguarding confidential information,” the company said in a statement.
Both companies declined to comment further on the agreement or potential merger talks.
In reporting second-quarter earnings in August, US Foods CEO David Flitman told analysts that his company had approached PFG to discuss an acquisition, but PFG had so far declined that invitation.
“We believe that a combination with PFG has the potential to create significant value for both companies and our collective stakeholders, while enhancing competition in the foodservice industry,” Flitman said, according to a transcript from financial services site AlphaSense. “We believe a combination would bring together the best of both companies, resulting in meaningful economies of scale, expanded growth opportunities, complementary geographic reach, operational efficiencies, and a differentiated go-to-market offering based on service excellence, industry-leading capabilities and a strong customer-centric sales force.”
Customers of the combined company, Flitman added, would benefit from a broader product offering and enhanced ability to compete in the marketplace, as well is increased efficiencies.
US Foods distributes primarily to restaurants, healthcare facilities and schools. PFG distributes products to convenience stores, grocery stores and vending machines.
In 2021, PFG acquired Core-Mark, one of the largest wholesale distributors in convenience retailing.
A potential PFG-US Foods marriage has been rumored since July, when Bloomberg first reported the possible combination of the country’s second- and third-largest distributors, respectively.
Sysco, the largest broadline distributor in the U.S., generated $64.6 billion in total sales in 2024, according to data from sister research firm Technomic. PFG, meanwhile, generated $60 billion in sales last year and US Foods had $37.9 billion, according to Technomic data.
US Foods, however, has a slightly higher market capitalization than PFG, at $17.86 billion compared to $16.29 billion, according to FactSet as reported by The Wall Street Journal. Sysco is reportedly valued at $38.19 billion.
Early this month, Performance Food Group disclosed that it had received a nomination notice for four director candidates from activist investment group Sachem Head. The nominees include a couple of former US Foods board members.
“Sachem Head has focused its dialogue with us on the suggestion that PFG explore a potential combination with US Foods and, absent a transaction, that PFG consider ways to further improve margins,” PFG said in a statement.
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