SPRINGDALE, AR
In order to resolve antitrust concerns with the U.S. Department of Justice surrounding its $7.7 billion acquisition of Hillshire Brands, Tyson Foods has announced that it will be selling off Heinold Hog Markets. According to the Wall Street Journal, Heinold makes up less than 1% of Tyson's yearly revenues, explaining why the company would be happy to sell it off in order to clear the way for the relatively much larger Hillshire deal.
Without the sale of Heinold Hog Markets, Tyson would have collectively been responsible for over one third of all sow purchases in the United States. This would have exerted downward pressure on hog prices, something not unnoticed by the coalition of 82 farm, consumer and rural-community groups which petitioned the government to take action against Tyson.
"Farmers are entitled to competitive markets for their products," said Bill Baer, Assistant Attorney General in charge of the Justice Department's Antitrust Division.
According to the Wall Street Journal, State Attorney Generals for Illinois, Iowa and Missouri agreed with this assessment, joining the Justice Department's civil lawsuit to block the Tyson-Hillshire acquisition on antitrust grounds.
The Heinold compromise however offers a way forward for all parties. According to Baer, with the Heinold Hog sale, hog breeders "will continue to receive the benefits of vigorous competition when selling sows."
Tyson and Hillshire have released a statement saying that they will divest Heinold within 90 days, with management and operations held "entirely separate, distinct and apart from those of Hillshire” until the close of the sale.
The Tyson-Hillshire acquisition is expected to close by September 27th, according to the Wall Street Journal.
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