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DOJ Asks for More Info in Tyson's Acquisition of Hillshire

DOJ Asks for More Info in Tyson's Acquisition of Hillshire

Justice Department initiates second request in Tyson's acquisition of Hillshire; Sen. Chuck Grassley of Iowa says deal could decrease competition in the pork industry

The U.S. Justice Department Tuesday issued a request for additional information from both Tyson Foods and Hillshire Brands following the companies' proposed plans to merge.

According to Tyson, the "second requests," in which the companies were asked to provide more information to the DOJ, "relate only to a very small portion of the combined Tyson/Hillshire Brands business, and the parties are working expeditiously to resolve this matter with the Antitrust Division."

Hillshire Brands food products are seen on a store shelf on May 29, 2014, in Miami, Florida. (Photo by Joe Raedle/Getty Images)

As a result of the second requests, Tyson has extended its tender offer to Hillshire by one week, to Aug. 19. Tyson said it and Hillshire Brands continue to expect that the transaction will be completed by or before September 27, 2014.

Ag groups, legislators show concern
In a letter to the Justice Department dated Aug. 5, U.S. Sen. Chuck Grassley, R-Iowa, says Tyson's acquisition of Hillshire Brands could increase concentration and decrease competition in the U.S. pork industry.

Grassley said he also is concerned about the acquisition's impact on consumer choice and the price of pork.

"Independent, small producers have been to my office to express their own concern. In particular, they fear that Tyson could engage in the practice of 'tie-in' sales of sows with market hogs, which would put independent producers at a tremendous disadvantage as they look for markets for their sows," Grassley said.

Related: Tyson, Hillshire Sign Definitive Merger Agreement

Tyson won the favor of Hillshire Brands board in July after a brief bidding war for the business with Pilgrim's Pride. Ultimately, Tyson Foods settled on a price of $63 per share to acquire all outstanding shares of Hillshire Brands, an all-cash transaction valued at approximately $8.55 billion.

National Farmers Union President Roger Johnson also expressed concerns about the deal in June, suggesting that the Justice Department consider enforcing anti-trust laws to halt the potential acquisition.

"Tyson Food's likely purchase of Hillshire benefits corporate owners at the expense of farmers and consumers," Johnson said in a June statement. "Farmers and ranchers will have fewer buyers and Tyson will be better able to dictate lower prices paid to producers."

Related: Tyson's Bid for Hillshire Brings Anti-Trust Concern

Similar sentiments appeared in Grassley's letter to William Baer, Assistant Attorney General, Antitrust Division in the Department of Justice.

"The proposed Tyson Foods-Hillshire Brands Company combination could reduce the already limited number of buyers for the commodities of small, independent pork producers," Grassley wrote. "Many independent producers and family farmers are concerned about increased vertical integration, expanded packer ownership, exclusive contracting and captive supply. I share these concerns about anti-competitive business practices."

Grassley is the Ranking Member of the Senate Judiciary Committee, which has jurisdiction over anti-trust policy.

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