UPDATE 1-Canada Competition Bureau OKs 2 hog producer takeovers

Mon Dec 17, 2012 4:53pm GMT

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* Canadian hog industry hit by rising cost of feed

* Both firms being purchased are in financial trouble

OTTAWA Dec 17 (Reuters) - Canada's Competition Bureau has approved two mergers in the domestic hog industry, where producers are struggling to cope with heavy losses caused by higher feed prices.

The bureau said on Monday it would let Maple Leaf Foods Inc buy hog producer Puratone Corp for C$42 million ($43 million) as well as allow Olymel LP to buy Blue Sky, Canada's second-largest hog producer, out of receivership for C$65.25 million.

"In both investigations, the bureau concluded that the mergers were unlikely to lead to a substantial lessening or prevention of competition," it said in a statement.

Soaring grain costs caused by a severe U.S. drought mean North American hog farmers are losing as much as C$50 for every pig they raise, forcing some to exit the industry. Packers are concerned about finding enough pigs to slaughter.

Canada is the world's third-largest pork exporter.

Puratone, which is based in the western Canadian province of Manitoba, raises 500,000 hogs annually. It entered court protection from creditors in September.

Big Sky, which produces about 1 million pigs per year and is based near Humboldt, Saskatchewan, entered receivership in early September.

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