Sachem Head presses Performance Food Group for US Foods merger and board shake-up

Sachem Head Capital Management has opened a new front in the food-distribution sector, calling on Performance Food Group to weigh a merger with rival US Foods while nominating four directors for election at the 2025 annual meeting.

Activist fund moves to reshape the board

On 21 August, New York–based Sachem Head delivered a nomination notice that places founder Scott Ferguson and three industry veterans—David Toy, R. Chris Kreidler and Karen King—on the ballot for Performance Food Group’s (PFG) next shareholder vote. The hedge fund, which owns an estimated 2 % to 4 % of PFG’s outstanding shares, argued that new voices are needed to examine strategic options and accelerate operating improvements.

Ferguson and Toy previously served together on the board of US Foods after Sachem Head’s 2019 investment in that company. Kreidler spent six years as chief financial officer at Sysco, while King is an executive vice-president at McDonald’s and a current director at Aramark. By proposing this slate, the activist is seeking influence over a distributor that generated roughly US$1.9 billion in adjusted EBITDA across its foodservice, convenience and specialty segments in fiscal 2023.

Merger rationale centres on scale and synergies

Sachem Head’s main demand is that PFG engage with US Foods about a stock-based combination. The fund points to potential annual cost and purchasing synergies estimated between US$800 million and US$1 billion, largely within PFG’s core foodservice operations. Those figures draw on benchmarks from Sysco’s 2013 bid for US Foods, which projected savings of at least US$600 million—a deal ultimately blocked by regulators two years later.

The activist contends that antitrust risk is lower this time because a PFG–US Foods tie-up would unite the industry’s second- and third-largest players, rather than the first- and second-largest, and because PFG lacks significant presence on the US West Coast. Nonetheless, any agreement would face scrutiny from the Federal Trade Commission, which in 2015 halted the earlier Sysco transaction. The FTC’s opinion blocking Sysco and US Foods cited reduced competition for national restaurant chains as the principal concern.

US Foods disclosed in a July 2025 filing that it had approached PFG regarding a merger, but the target has not engaged meaningfully, according to Sachem Head. The fund argues that shareholder value could rise sharply if the companies combine purchasing volumes, logistics networks and warehouse footprints.

Cost improvements remain an alternative path

Should a merger prove unattainable, Sachem Head is urging management to lift margins through tighter expense control and network optimization. PFG’s EBITDA margin stood at 4.5 % in its latest fiscal year, trailing both Sysco and US Foods. The activist believes incremental efficiencies in transportation and procurement could narrow that gap.

The governance campaign arrives amid expected leadership changes. George Holm, chief executive for 17 years, is widely reported to be considering retirement, with company president Scott McPherson viewed as successor. Sachem Head claims the transition provides an opportune moment to examine strategic alternatives, including a merger that might otherwise encounter internal resistance.

Possible proxy contest looms

If PFG declines to negotiate, Sachem Head is prepared to run a full proxy fight. The firm has had recent success in such battles, securing board representation at Olin, US Foods and Twilio. Several of PFG’s largest investors are alternative asset managers often receptive to activist proposals, increasing the likelihood of support for the hedge fund’s slate.

PFG, valued at roughly US$16.3 billion based on a recent share price of US$104.40, has not publicly responded to the nomination notice. For now, the distributor continues to operate from 144 facilities that supply more than 300,000 customer locations across the United States.

Whether through a merger or internal overhaul, shareholders will be watching the 2025 annual meeting for signals on the company’s next chapter.

See our latest Finance News Update , visit our Finance News Update section.

Finance News Update

Image credit: Sopa Images | LightRocket | Getty Images