Macquarie: Market Won't Like Sysco-U.S. Foods Fallout, But Dividend Yield Gives Floor For Investors

In a report published Wednesday, Macquarie analyst Bob Summers maintained an Outperform rating on

, with a price target of $45. Analyst Bob Summers wrote, "Sysco was dealt a significant blow in its proposed merger with US Foods as a federal judge ruled to block the transaction. While SYY will review the ruling for potential appeal, we believe the ruling essentially closes the door on the transaction." In case the transaction terminates, Sysco will need to pay US Foods a breakup fee of $300 million. Additionally, both Sysco and US Foods will owe a $25 million fee, split evenly, as a result of a divestiture agreement. Macquarie estimates Sysco to have already spent more than $350 million in preparation of the acquisition. Summers said that he expects the market to have a "modest negative reaction," although the dividend yield will "provide a floor for the stock." The company's Plan B should be to use its balance sheet or the real estate it owns – 83 percent of its distribution facilities - to create shareholder value. This represents "the most immediate path to rebuilding management credibility," the report mentioned.