Tyson Foods Settles With DOJ Over Merger Plans

(CN) - Tyson Foods Inc., the nation's largest meat processor, and Hillshire Brands Co., reached a settlement Wednesday that will clear the way for their $8.5 billion merger.

The key to the deal filed with U.S. District Judge James Boasberg is Tyson's agreement to divest of Heinold Hog Markets, which purchases sows for Tyson that are then processed into sausage.

Without the divestiture the proposed merger would have combined companies that account for more than a third of sow purchases from U.S. farmers, thereby likely reducing competition for purchases of sows from farmers, according to a statement from the Justice Department.

"Farmers are entitled to competitive markets for their products," Assistant Attorney General Bill Baer, in charge of the Antitrust Division, said in a statement. "Today's proposed settlement will help ensure that hog breeders in the United States will continue to receive the benefits of vigorous competition when selling sows."

"Without the divestiture, the proposed acquisition would have eliminated a significant customer for farmers' sows and likely would have resulted in less competition in this important agricultural market," Baer added.

Three state attorneys general - of Illinois Iowa, and Missouri - joined the department in the civil lawsuit filed today in Washington to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the department's lawsuit.

Tyson must sell Heinold Hog Markets to a buyer approved by the Antitrust Division within 90 days, although extensions are available under certain conditions.

In a joint press release, the two companies refrained from saying very much at all about the settlement other than that it happened, and "is subject to approval by the court under the traditional procedures set forth in the Antitrust Procedures and Penalties Act."

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