Tyson Allowed To Complete Business Merger With Hillshire Brands
On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Monday, September 1, 2014.
Companies may decide to merge for some type of business advantage. Many times, the main objective is to control a larger portion of the market, in California or anywhere across the country. However, these companies must be careful, since too large of a business merger may run afoul of antitrust laws. This is what Tyson had to deal with during its recent business merger with Hillshire Brands.
The merger could potentially make Tyson the number one player in the chicken production market. It would also expand its reach to adjacent markets, such as lunch meats and desserts. The company would also attain considerable strength in the breakfast market, where Tyson has previously lacked significantly. However, the size of the merger and how much power it would give Tyson caught the attention of antitrust authorities.
In order for Tyson to make the merger acceptable to regulators, it had to make several adjustments to its business plans as well as the business plans of Hillshire Brands. First, in order for the merger to be allowed to move forward, Hillshire Brands was forced to withdraw a previous offer to purchase Pinnacle Foods, Inc., a frozen foods maker. Additionally, Tyson agreed to divest its subsidiary, Heinold Hog Markets, in order to appease the demands of regulators.
This case illustrates how important it is to understand the law during a business merger in California or in any other state. In order to determine the likelihood of being able to pass antitrust measures, the business entity will have to know the state and federal statutes, as well as applicable case law. Even this will not automatically ensure regulators will allow a merger to move forward. In some cases, litigation may be required in order to complete a planned merger.
Source: Zacks, "Tyson Foods Completes Merger, Hillshire Brands Delisted", , Sept. 1, 2014