UPDATE 1-U.S. approves deal that makes biggest flour miller even bigger

(Adds which mills are being divested, DOJ comment, share prices)

WASHINGTON, May 20 (Reuters) - ConAgra Foods Inc, Cargill Inc and CHS Inc won U.S. antitrust approval on Tuesday to merge their North American flour mill operations after recently agreeing to sell four mills to a Japanese company.

To secure Justice Department approval, the grain and food-handling companies agreed to sell four mills to Miller Milling Co, a U.S.-based unit of Tokyo-based Nisshin Flour Milling Inc.

The mills to be sold are Horizon's facility in Los Angeles and ConAgra's facilities in Oakland, California; Saginaw, Texas; and New Prague, Minnesota.

The companies had announced in March 2013 that ConAgra Foods Inc would join Horizon Milling, a joint venture of Cargill Inc. and CHS Inc. that is the largest flour miller in America. CHS is owned by farmers and cooperatives.

Horizon Milling is already the largest U.S. flour miller, Archer Daniels Midland is the second-largest and ConAgra is No. 3.

"Without the Antitrust Division's required divestitures, the creation of Ardent Mills would have resulted in less competition in the sale of wheat flour, resulting in customers, such as industrial bakers and food service companies, paying higher prices for wheat flour," said Renata Hesse, a deputy assistant attorney general at the Antitrust Division.

The three companies said in a joint news release they were pleased with the approval, and that the new company would begin operations around the end of May.

"We strongly believe in the merits of this transaction and the benefits it will bring to customers, consumers, wheat suppliers, shareholders and employees," said Paul Maass, president of Private Brands and Commercial Foods for ConAgra Foods.

In midday U.S. trading, Conagra shares were down 0.3 percent and CHS shares were up 0.5 percent.

(Reporting by Diane Bartz, editing by Ros Krasny and Doina Chiacu)