US meat giant Tyson Foods has agreed to sell a hog business to win approval from antitrust regulators for its proposed buyout of Hillshire Brands, the Justice Department said Wednesday.
Tyson, the leading US poultry seller, agreed in early July to buy sausage maker Hillshire for $8.55 billion, including Hillshire's debt.
For the deal to proceed, Tyson will divest Heinold Hog Markets, its sow purchasing business, the Justice Department said.
Without the business sale, Tyson and Hillshire would have accounted for more than a third of sow purchases from US farmers.
"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," said Bill Baer, assistant attorney general in charge of the antitrust division, in a statement.
Under the settlement, which must be approved by a federal court, Tyson must sell all of Heinold Hog Markets to a buyer approved by the antitrust division.
The merger deal adds Hillshire's popular downstream processed meats -- higher value-added brands like Jimmy Dean sausages and Ball Park hot dogs -- to the more commodity-like fresh and frozen meats of the world's second-largest meat processor.
Tyson says bringing the two businesses together would deliver $300 million in annual savings to the combined company.
Investors welcomed the news, pushing Tyson shares up 1.9 percent to $37.86 in late-afternoon trade, while Hillshire edged up 0.1 percent to $62.98.