Tyson To Sell Heinold Hog For Hillshire Merger Approval - Update

(RTTNews) - Tyson Foods Inc (TSN) Wednesday agreed with the U.S. Department of Justice to sell its Heinold Hog Markets business to dispel antitrust fears, thereby clearing the path for its proposed acquisition of Hillshire Brands Co (HSH).

As part of the settlement, Tyson and Hillshire agreed with the Justice Department to divest Heinold within 90 days, and until then, Tyson Hog Markets Inc, the unit that owns the Heinold business, would operate as an independent business and would have no links with Hillshire.

Tyson and Hillshire expect to close their merger by Sept. 27.

Heinold Hog Markets buys and resells female hogs to sausage makers, while Hillshire buys directly from farmers the hogs used to make its sausage products. Heinold had revenue of about $270 million in 2013, accounting for about 1 percent of Tyson's total revenue.

The divestment of Heinold assumed significance after complaints from farm and consumer groups that the merger would scuttle the business prospects of hog farmers, hurt consumers, and stifle competition in the meat industry.

The Justice Department opined that Tyson needed to sell Heinold for the merger to consummate as the combined entity would account for a chunk of sow purchases.

On Wednesday, the Justice Department and the attorney generals of three states - Illinois, Iowa and Missouri - filed a lawsuit in the U.S. District Court for the District of Columbia against the merger, but agreed that their objections would cease if the Court approved the proposed settlement with Tyson and Hillshire.

Tyson, based in Springdale, Arkansas, is one of the world's largest processors and marketers of chicken, beef and pork. In July, the company agreed to acquire Hillshire for about $8.55 billion, eliminating a rival bid from chicken products maker Pilgrim's Pride (PPC).

Tyson stock closed Wednesday at $37.71, up $0.56 or 1.52%, on a volume of about 5 million shares on the NYSE.

Hillshire stock closed at $62.96, up $0.03 or 0.05%, on a volume of 8 million shares on the NYSE.