Updated, 7:26 p.m. |
Tyson Foods has reached a deal with the Justice Department to sell its hog-purchasing business as part of its planned $7.7 billion acquisition of Hillshire
Brands.
The Justice Department said Wednesday that it would require Tyson to sell its Heinold Hog Markets unit to win antitrust approval for the merger.
The settlement ends the antitrust review period of the merger, Tyson said in a statement. Under the terms of the agreement, Tyson must sell Heinold Hog Markets, which had annual sales of about $270 million and employs about 45 people.
The business is a unit Tyson Hog Markets, and the companies agreed to operate it as an independent, competitive business until a buyer who is satisfactory to the antitrust division is found.
Heinold primarily buys aged hogs from independent pig farmers for sale to sausage and other meat processors. Hillshire buys sows directly from farmers, which it then makes into sausage sold under the Jimmy Dean and Hillshire Farm brands.
The government said that without the sale of the unit, the merger would have combined companies that account for more than one-third of sow purchases in the country. Regulators said that concentration of power could have eliminated the benefit that American farmers have received from the competition between the two companies.
The state attorneys general of Illinois, Iowa and Missouri had joined the Justice Department in pushing for the divestiture.
Tyson Foods formally struck a deal in early July to buy Hillshire Brands after winning a bidding war against Pilgrim’s Pride.
Both the companies have sought to grow by buying well-known brands, which command fatter profit margins than commodity meats, as the food industry undergoes a big round of consolidation.
Hillshire’s negotiations had been complicated by its previous $4.3 billion deal to buy Pinnacle Foods, the maker of Vlasic pickles and Birds Eye frozen vegetables. The Tyson-Hillshire merger was reached only after Hillshire officially canceled its Pinnacle deal.