*

Ferguson joins boards after Sachem Head nominated four

directors

in August

*

Ferguson joins Audit and Finance Committee where proposed

M&A is

discussed

*

Settlement with Sachem Head comes one week after "Clean

Team

Agreement"

(Updates with information from 8K regulatory filing in

paragraph 4)

By Svea Herbst-Bayliss

NEW YORK, Sept 23 (Reuters) - Activist investor Scott

Ferguson is joining the board of Performance Food Group ( PFGC )

, the company said on Tuesday, at a time the hedge fund

is urging the food distributor to consider merging with rival US

Foods Holding ( USFD ).

Less than five weeks ago, Ferguson's Sachem Head Capital

Management nominated four director candidates to Performance

Food's ( PFGC ) board. Last week, Performance Food ( PFGC ) and US Foods ( USFD ) signed an

agreement to exchange sensitive financial information without

violating anti-trust laws.

If Performance merged with US Foods ( USFD ), the two companies could

rival the industry leader Sysco ( SYY ), which has 17% of the

market share.

Performance Food's ( PFGC ) board will grow by one, to 13 members and

Ferguson will join the Audit and Finance Committee. The company

said in a regulatory filing that this is where "all proposed M&A

transactions and other strategic alternatives are discussed."

Ferguson would also become a member of any committee

that might be created to "evaluate potential strategic

alternatives or any other extraordinary transaction," the

company added in the filing.

"This outcome is the result of constructive engagement with

Scott and his team and demonstrates our Board's openness to

fresh perspectives," Performance Food's ( PFGC ) CEO George Holm said in

a statement. "I look forward to working alongside Scott and the

rest of the Board as we continue to grow our business to drive

shareholder value."

Holm had told analysts in August that there was no basis to

engage with US Foods ( USFD ) about a possible tie-up.

Sachem Head, which built its current position in Performance

Food ( PFGC ) this quarter, is well versed in the food distribution

business. It previously owned a stake in US Foods ( USFD ) but has exited

that position.

From 2022 to 2024, Ferguson served on the board of US Foods ( USFD ),

having settled with the company after a bitter board room fight.

Late last month Ferguson nominated four directors to Performance

Food's ( PFGC ) board, suggesting the company should consider a possible

tie up with US Foods ( USFD ) or find other ways to improve margins.

After consulting with other large shareholders, Performance

Food's ( PFGC ) mood on a possible deal appears to have shifted, lawyers

and bankers said. They added that the so-called "clean team

agreement" signed last week could be seen as a possible step to

a deal.

Ferguson has served on numerous public company boards,

including Olin, Elanco and Autodesk ( ADSK ),

and is generally considered a thoughtful and helpful director,

said lawyers who are familiar with his board service.

Activist investors have been extraordinarily busy in recent

weeks after a more tepid second quarter, bankers said. They

noted a resurgence in M&A activity has given many activists the

courage to pursue fresh targets with demands for board seats and

suggestions for companies to put themselves up for sale.