D.O.J. closes investigation on Smithfield-P.S.F. merger

by Keith Nunes
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WASHINGTON — Smithfield Foods Inc., Smithfield, Va., gained U.S. Department of Justice approval on May 4 to purchase Kansas City-based Premium Standard Farms Inc. (P.S.F.). This past September, Smithfield announced it bid $693 million in cash and stock to buy P.S.F. The world’s largest pork producer also would assume $117 million of P.S.F. debt. In February, more than 85% of P.S.F. shareholders voted in favor of the deal.

The D.O.J.’s antitrust division said it had closed its investigation of the deal without taking action.

"After a careful investigation of Smithfield’s proposed acquisition of P.S.F., the antitrust division determined that the merged firm is not likely to harm competition, consumers or farmers," the antitrust division said.

The proposed merger prompted complaints by Iowa’s two U.S. Senators, Republican Charles Grassley and Democrat Tom Harkin, contending that the merger would harm smaller, independent producers.

When the deal is complete, Smithfield Foods will control approximately 30% of the U.S. pork market. However, the D.O.J. concluded the merged company would continue to face strong competition in the sale of fresh and processed pork from competitors such as Tyson Foods, Inc., Seaboard Foods and Cargill Meat Solutions.

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