US Foods Scraps PFG Merger, Bets $1.25B on Standalone Growth Strategy

ROSEMONT, Ill. – November 24, 2025 – In a decisive move that reshapes the strategic landscape of the American foodservice industry, US Foods Holding Corp. announced it has mutually terminated merger discussions with rival Performance Food Group (PFG). Rather than pursuing a combination that would have created a nearly $100 billion behemoth, US Foods is pivoting sharply, launching a major capital return program and emphatically reaffirming its confidence in a standalone growth plan.

The company immediately followed the termination news with the announcement of a planned $250 million accelerated share repurchase (ASR) and a new, board-approved $1 billion share repurchase authorization. This $1.25 billion bet on its own stock sent a clear message to Wall Street, which responded by pushing US Foods shares up 9% in trading following the announcement.

“We have concluded that our best path to long-term value creation is executing our Long-range Plan, including our disciplined capital allocation framework,” stated Dave Flitman, CEO of US Foods, in the official press release. The decision concludes a roughly three-month exploratory process, which included a "clean team" data review to assess potential synergies and, crucially, the daunting regulatory pathway for such a deal.

The Shadow of Antitrust

While the joint statement cited a mutual agreement after a “thorough analysis,” the specter of regulatory opposition loomed large over the entire process. The foodservice distribution sector, which serves critical institutions from restaurants and hotels to schools and hospitals, is dominated by a trio of giants: Sysco, US Foods, and PFG. Any consolidation among them invites intense scrutiny from the Federal Trade Commission (FTC).

Industry veterans and analysts point to the failed 2015 merger between Sysco and US Foods as a cautionary tale. At the time, the FTC successfully sued to block the deal, arguing that combining the nation’s top two distributors would create a company controlling 75% of the national broadline market, leading to higher prices and reduced service for customers. A federal judge agreed, and the deal collapsed. That historical precedent likely cast a long shadow over the US Foods-PFG talks. A merger of the second and third-largest players would have created a new titan with a market share rivaling Sysco's, a scenario almost certain to trigger a significant antitrust challenge from an increasingly assertive FTC.

For customers, including large healthcare systems and senior living facilities that rely on these distributors for predictable pricing and reliable supply chains, the termination of the deal means the current competitive structure remains intact. The intense rivalry for their business between the three main players will continue, a dynamic that regulators have fought to preserve.

A Confident Pivot to Shareholder Value

By walking away from the deal, US Foods management has sidestepped a potentially protracted and costly regulatory battle. Instead, the company is channeling its resources into a direct appeal to its shareholders. The combined $1.25 billion in share repurchases is a powerful signal of the board’s belief that its stock is undervalued and that its internal growth prospects are more compelling than a transformative, but risky, merger.

“Both companies possess clear, low-risk value creation paths,” noted one Guggenheim Securities analyst in a report following the news, maintaining “buy” ratings on both US Foods and PFG. The market’s positive reaction to US Foods' stock suggests investors feel a sense of relief, rewarding the company for removing the uncertainty and potential dilution associated with a large-scale acquisition. The move is also seen as a confident response to the activist investors who had reportedly pushed for the combination to unlock efficiencies.

However, some caution that while buybacks provide an immediate boost to earnings per share (EPS), they do not solve underlying industry challenges. Analysts have pointed to modest organic profit growth in the sector, weighed down by high interest costs and persistent macroeconomic headwinds affecting consumer spending at restaurants. US Foods' ability to deliver on its ambitious long-term promises will ultimately be the true test of this strategy.

The Standalone Path: Digital, Data, and Discipline

At the heart of US Foods' confident pivot is its reaffirmed 2025-2027 Long-range Plan. This is not a new strategy, but a forceful recommitment to an existing one. The plan sets aggressive targets, including a 5% compound annual growth rate (CAGR) for net sales, a 10% CAGR for Adjusted EBITDA, and an impressive 20% CAGR for Adjusted Diluted EPS through 2027.

Achieving these goals hinges on several key initiatives that aim to differentiate US Foods in a competitive market. The company is investing heavily in its digital and e-commerce platforms, modernizing its online ordering tools to provide restaurant and healthcare operators with more control and data. This is complemented by a push into warehouse automation and predictive analytics to streamline its own supply chain, enhance inventory visibility, and improve service levels. The strategy is to become not just a supplier, but a technology and business solutions partner to its approximately 250,000 customers.

While the company posted strong third-quarter earnings, some market-watchers express skepticism about its ability to hit its most ambitious targets given the slowing revenue growth across the industry. The success of this standalone plan will depend on flawless execution and its ability to continue taking market share, particularly in the profitable independent restaurant segment.

An Unchanged Battlefield

The termination of the deal ensures the competitive landscape of the U.S. foodservice industry remains a three-way contest. Sysco retains its crown as the undisputed market leader, while US Foods and PFG will continue to vie for the number two and three spots. The distinct corporate cultures noted by insiders—US Foods’ more centralized, efficiency-minded approach versus PFG’s decentralized, sales-driven model—will continue to shape their individual strategies rather than clashing in a complex integration.

The battle for market share, especially among high-margin independent restaurants and large institutional clients, will proceed unabated. For customers, this means the benefits of competition—in pricing, innovation, and service—will persist. For the distributors themselves, the pressure is on to innovate and execute to win in a market that, for now, will not be fundamentally altered by massive consolidation.