Posted Aug. 27, 2014

Tyson Foods will divest ownership of Heinold Hog Markets, which operates two sow purchasing facilities in Iowa, under a pending agreement with the U.S. Justice Department, Iowa Attorney General Tom Miller, and state attorneys general in Illinois and Missouri, Miller announced today.

The agreement, subject to a federal judge’s approval, will allow Tyson to proceed with its $8.5 billion acquisition of the Hillshire Brands Company.

Tyson Hog Markets, Inc., a subsidiary of Tyson and Tyson Fresh Meats, Inc., buys and resells sows through its Heinold Hog Markets division. Heinold Hog Markets operates buying facilities in Sioux City and Story City, and six more across the Midwest, including facilities in Illinois, Indiana, Michigan, Minnesota and Nebraska.

“Our concern was that this buyout would have greatly reduced the competitive market and would affect purchase prices for Iowa hog breeders trying to sell their sows,” Miller said. “Without the divestiture agreement we just reached, the Tyson-Hillshire deal would have combined companies that account for more than a third of all sow purchases. That’s significant.”

Miller and the other attorneys general joined the U.S. Justice Department today in filing a lawsuit in the U.S. District Court for the District of Columbia to block the proposed transaction. Simultaneously, the states and Justice Department filed a proposed settlement that, if approved, would resolve the competitive concerns alleged in the lawsuit.

Heinold buys sows from farmers, sorts the livestock at buying stations, and resells and trucks the sows to sausage processors, including Hillshire. Hillshire buys sows directly from farmers, which it then processes into sausage sold under the Jimmy Dean and Hillshire Farm brands.

Tyson’s Hillshire acquisition would combine two major sow purchasers and eliminate the benefit farmers have received from the competition between Hillshire and Tyson’s Heinold Hog Markets. Under the terms of the proposed settlement, Tyson must divest Heinold Hog Markets in its entirety to a buyer approved by the Antitrust Division.