Terms of Tyson Foods/Hillshire Brands merger finalised

01-Sep-2014 - Last updated on 02-Sep-2014 at 09:38 GMT

The two companies have combined sales of more than $4bn a year

Tyson Foods announced the completion of its merger with Hillshire Brands last week, in a move which positions Tyson as "a clear leader in the prepared foods business", according to a statement from the company.

Tyson had offered to purchase all the outstanding shares of common stock of the Chicago-based firm for $63 per share in cash, with the tender offer now successfully completed.

The combined annual sales of the two US companies amount to more than $40bn, with their integration expected to generate savings of around $225m in fiscal 2015, rising to more than $500m by fiscal 2017.

However, as part of the deal, the US Department of Justice said it required Tyson Foods to divest Heinold Hog Markets – its sow purchasing business – in order for it to go through.

The department said that, without the divestiture, the transaction would have resulted in the combined companies accounting for more than a third of sow purchases from US farmers, thereby likely reducing competition.

Bill Baer, assistant attorney general in charge of the antitrust division, said: "Farmers are entitled to competitive markets for their products. 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."

Donnie Smith, chief executive, Tyson Foods, said: "As of today (28 August), Tyson Foods and Hillshire Brands are officially together in one great company.

"Part of our strategic growth plan has been to shift toward higher-margin prepared and branded foods. This transaction gives us a portfolio of complementary, proven brands as a new springboard and accomplishes in a short time what would have taken us years to build on our own."

A new leadership team has been selected, which features a mixture of senior figures from both companies.