Performance Food Group said Tuesday it has entered a “clean team” agreement with US Foods, allowing the two foodservice distribution companies to exchange confidential information as they evaluate the feasibility of a potential merger.
The agreement sets up an independent group of lawyers, economists, and consultants to review sensitive business data from both firms. The arrangement is designed to let the companies explore regulatory hurdles and cost synergies of a deal while shielding competitively sensitive information from their own operating teams.
PFG said its board and executives had recently met with several major shareholders to discuss strategic options before holding discussions with US Foods. After consulting with outside financial and legal advisers, PFG’s board concluded there was enough basis to begin the information-sharing process.
The two companies have been in informal contact for several months, according to people familiar with the matter, exploring whether a combination could create one of the largest foodservice distributors in the United States. Previous discussions had focused on potential antitrust challenges and how the companies could structure a transaction that might withstand regulatory scrutiny, given their overlapping markets and customer bases. Those preliminary talks did not involve sharing competitively sensitive information, which is why the new clean team agreement is considered a key step toward more substantive merger evaluation.
The company cautioned there is no guarantee the talks will lead to a formal transaction proposal or any deal. PFG said it will not comment further unless a definitive agreement is reached or the discussions are called off.
J.P. Morgan and BofA Securities are advising PFG on financial matters, while Skadden, Arps, Slate, Meagher & Flom is providing legal counsel.
Based in Richmond, Virginia, Performance Food Group is one of the largest food and foodservice distributors in North America, operating more than 150 distribution centers and serving over 300,000 customer locations. US Foods, based in Rosemont, Illinois, is also one of the country’s biggest broadline foodservice distributors, supplying more than 250,000 restaurants and foodservice operators nationwide.
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