Business formation between Hillshire Farms and Tyson Foods is almost complete, contingent on the approval of the U.S. Department of Justice. This merger is a huge business formation between the two food giants and the Department of Justice is involved because of anti-trust issues. In order to complete the purchase of Hillshire Farms, Tyson must meet the requirements of the officials, which includes divesting a certain animal purchasing business.
Maryland readers may be interested to know that Justice officials required Tyson to divest this business because after the purchase of Hillshire Farms, this one company would be responsible for more than one-third of sow purchases in the country. This would likely reduce the potential for competition and options for farmers. The merger was contested, likely over concerns regarding food production companies and their ability to compete with such a large company.
One of the purposes of the Antitrust Division of the Department of Justice is to encourage healthy competition between companies. In this situation, the officials ensured that this particular industry did not become too consolidated. When two large businesses are merging, it is important that the business formation does not violate any anti-trust laws. Even small businesses can benefit from legal assistance when drafting business plans, simply to ensure that all legal requirements have been met.
The laws pertaining to business formation are complex. Every Maryland business can benefit from taking the proper legal steps when forming a new business or merging with an existing company. Carefully evaluating the entire situation can reveal the best course of action and prevent mistakes.
Source: wisfarmer.com, "Tyson, Hillshire merger closer", Jan Shepel, Sept. 2, 2014