Tyson and IBP have announced they will complete their merger under the original terms. After last week's court judgment in IBP's favor, the announcement comes as no surprise. The deal has drawn scrutiny from antitrust experts and farmers advocate groups, who fear the protein conglomerate will hurt independent producers, small farmers and consumers.

But recent data from the Department of Agriculture suggests these fears may be unfounded. The largest US chicken producer, Tyson Foods, and dominant beef producer IBP, will merge on terms identical to those negotiated early this year. The legal filing came nearly two weeks after Vice Chancellor Leo Strine of the Delaware Chancery Court ruled that Tyson illegally terminated its $4.7 billion agreement to acquire IBP, and ordered Tyson to complete the merger rather than pay damages.

Tyson claimed at the time it backed out of the deal in March that it had been misled and improperly induced into the deal by IBP, after it discovered a pending SEC probe into an IBP unit following the original agreement. But Tyson's chairman John Tyson said this week, "Today's step moves us down the road to our vision, creating the world's leading protein provider. Combining these two companies is strategically compelling...and will produce value for shareholders."

The deal has drawn scrutiny from antitrust mavens and farmers advocate groups, who fear the newly formed conglomerate will negatively independent producers, small farmers and consumers by leveraging its market power to raise retail prices, limit consumer choices, and foreclose competition. According to AP, the company will control 30% of the beef market, 33% of the chicken market, and 18% of the pork market, with annual sales of $24 billion.

But in light of recent data from the US Department of Agriculture, these fears may be unfounded. Although the US has so far avoided BSE ("mad cow") and foot and mouth disease, consumer concern has nonetheless dampened the meat market. Red meat production grew only 0.05% in 2000, compared to 4.4% in 1998 and 2.2% in 1999, while production of pork, lamb and mutton have all fallen in the past year. The only segment to remain steady was poultry.

Shrinking demand and weak economic conditions coupled with the increasing popularity of low-fat, low-cholesterol alternative meats, including bison, kangaroo and ostrich, will force the newly formed conglomerate to keep prices competitive to retain market share and customers.

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