Boston, MA 08/29/2014 (wallstreetpr) – Tyson Foods, Inc. (NYSE:TSN) has won regulatory approval to formally add Hillshire Brands Co (NYSE:HSH) to its portfolio. However, the company will have to let go its hog-purchasing business to avoid antitrust problems. The business to be divested has annual sales of about $270 million and has a workforce of about 45 people.
Tyson Foods reached an agreement with U.S. Justice Department to sell its Heinold Hog Markets as part of the deal to acquire Hillshire Brands. That agreement ended the antitrust review of the merger between Tyson and Hillshire Brands. Hienold buys hogs from big farmers and it sales the same to sausage and meat processors. Hillshire Brands Co (NYSE:HSH) also buys sows from farmers and process the same into sausages that are sold under its famous brands Hillshire Farm and Jimmy Dean. Tyson Foods, Inc. (NYSE:TSN) will now run Hienold as an independent and competitive business as it seeks a suitable buyer.
Fostering competition
Regulators noted that keeping Hienold would lead to the combined entity of Tyson Foods, Inc. (NYSE:TSN) and Hillshire Brands Co (NYSE:HSH) controlling more than one-third of the sow purchase market in the U.S., which flies in the face of antitrust regulations because it would deny farmers the opportunity to competitive pricing.
Tyson Foods, Inc. (NYSE:TSN) presented its offer to acquire Hillshire last month, coming against Pilgrim’s Pride that had also sought to join forces with Hillshire. However, the deal was also complicated by the fact that Hillshire had also offered to purchase Pinnacle Foods for about $3.4 billion. Hillshire agreed to end its pursuit of Pinnacle to give way for Tyson to have it for lunch.
Hillshire delists
Following the completion of the $8.55 billion merger deal, a single company with more than $40 billion in annual sales emerged. Relying on their already popular product brands, the companies, now under one roof, hope to achieve what they could not achieve independently. Tyson Foods, Inc. (NYSE:TSN) said that shares of Hillshire Brands Co (NYSE:HSH)’s common stock will delist following the completion of the merger.
