U.S. request delays sale of Hillshire

Thursday, August 14, 2014

Prompted by a request from the U.S. Department of Justice, Tyson Foods has pushed back its deadline to acquire Hillshire Brands.

The department's antitrust division requested more information from both companies Tuesday. If the deal goes through, Tyson -- leveraging Hillshire's leading brands -- would become the world's largest seller of prepared meats.

The companies stressed that the request covered "a very small portion" of the combined businesses and they were working with the Department of Justice to resolve the matter quickly. A Tyson spokesman declined to provide more information about the portion in question.

Tyson's offer to purchase Hillshire originally expired Tuesday, but the company extended it to Aug. 19. More extensions are possible, according to a news release.

Tyson spokesman Gary Mickelson said the company didn't know when the Justice Department review would be complete.

"We don't know but as indicated in the release, we remain hopeful that it will be completed by or before Sept. 27," he said.

Joshua Silverstein, a law professor at the University of Arkansas at Little Rock, said it's not unusual for the antitrust division to file a second request of information from companies involved in an acquisition.

"It shouldn't be at all surprising that they needed a second request in any context," he said. "Generally, the initial request is very broad and then if they realize they need something else, they send a supplemental request."

Sometimes the second request is for a large amount of documents that can take months to process and sometimes it consists of just a few documents, he said.

The Justice Department's move follows a letter sent to the antitrust division on July 24 by 82 trade organizations and faith-based groups opposing Tyson's acquisition.

The groups wanted the division to file a second request for information from the companies.

Food & Water Watch, a watchdog group focused on government regulation of food, water and fish production, helped organize the letter. Patrick Woodall, research director for the organization, said determining whether the combined food operations could constitute a monopoly is a work-intensive process.

On average, it takes several months to review a second request, but it's uncertain how large the request is in this case, he said.

"We think it's a substantial merger that requires close scrutiny," he said. "I'm heartened that the Justice Department recognized the significance and will give it a thorough look, but it's hard to know, given how Tyson characterized it, what the the next steps will be."

Business on 08/14/2014