WASHINGTON (AP) _ The Justice Department approved the $625 million merger of The Earthgrains Co. and Metz Holdings Inc. on Monday after they agreed to sell two Midwestern brands of white sandwich bread.
The government said the original deal would have substantially reduced competition in Des Moines, Iowa; Kansas City, Mo.; and Omaha, Neb., for the sale of what the industry calls white pan bread, because it is made from enriched white flour baked in flat, deep-walled pans.
The companies agreed to sell Earthgrains’ Colonial brand and Metz’s Taystee brand. Colonial is sold throughout Iowa and in parts of Kansas, Missouri, Nebraska and Illinois. Taystee is sold in parts of Kansas and Missouri.
In addition, the agreement also permits the government to require the companies to sell Earthgrains’ Des Moines bakery and other assets related to distributing white bread in that area.
``Without these divestitures, families with children _ the primary consumers of white pan bread _ would have faced higher prices throughout much of the Midwest,″ said Assistant Attorney General Joel I. Klein, head of the department’s antitrust division.
The division simultaneously filed a lawsuit to block the original deal and a proposed agreement to settle that lawsuit in U.S. District Court in Chicago. The court must approve the agreement.
Earthgrains, headquartered in St. Louis, operates 28 bakeries throughout the nation and had sales of $1.6 billion last year. In the areas covered by the agreement, it markets white pan bread under the Colonial and IronKids brands and private labels.
Metz, headquartered in Sioux City, Iowa, is a subsidiary of Specialty Foods Corp., of Deerfield, Ill., and had revenues of more than $600 million last year. Metz markets white bread throughout the Midwest and in the covered area sells it under the Taystee, Pillsbury and Old Home brands and private labels.