(Reuters) - Tyson Foods Inc, the largest U.S. meat processor, won U.S. antitrust approval for its purchase of Hillshire Brands Co on Wednesday.
Tyson's share price moved up sharply on the news, rising as much as 2 percent from the day's opening price and closing at $37.71, up 1.5 percent. Hillshire closed near steady at $62.96.
To win approval for the $8.5 billion merger, the companies agreed to sell Heinold Hog Markets, which purchases sows that are sold to sausage-makers, the Department of Justice 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," said Bill Baer, assistant attorney general for DOJ's antitrust division.
The attorneys general of Illinois, Iowa and Missouri, all big hog-producing states, joined the settlement that the companies reached with the Justice Department's Antitrust Division.
The deal was announced in June and moved ahead in July.
Springdale, Arkansas-based Tyson is a massive seller of chicken, beef and pork while Hillshire, based in Chicago, sells packaged meat brands such as Jimmy Dean, Ball Park and State Fair, as well as bakery products like Sara Lee.
The companies overlap in the business of buying sows when they are too old to breed, the Justice Department said.
Tyson's Heinold Hog Markets, which had revenues of $270 million, buys the animals from U.S. farmers in order to resell them to sausage makers. Hillshire buys them to make sausage for its Jimmy Dean and Hillshire Farm brands.
Between the two, they buy about 35 percent of all sows sold in the United States, the Justice Department said.
Heinold has operations in Illinois, Iowa, Indiana, Michigan, Minnesota and Nebraska.
"Although the sale of sows constitutes a small percentage of overall revenues, farmers rely on this source of income as an important contribution to their earnings," the Justice Department said in a competitive impact statement filed with the U.S. District Court for the District of Columbia.
That court must approve the proposed settlement.
The deal had came under fire from some farm, consumer and rural organizations, which had expressed concern that the meat-processing companies would have power to push down the prices paid to hog farmers.
U.S. Senator Chuck Grassley of Iowa, the largest U.S. hog state with about $4 billion in production annually, had also expressed concerns.
In a letter to the Department this month Grassley said the deal could hurt hog farmers and reduce consumer choice at the supermarket. His office could not be reached for comment after the companies' deal was announced.
(Reporting by Diane Bartz; Editing by Ros Krasny, Sandra Maler and Lisa Shumaker)
