Tyson Foods to sell Mexico and Brazilian poultry businesses to JBS/Pilgrims Pride — Cooperating rather than competing
Tyson Foods to sell Mexico and Brazilian poultry businesses
By Rita Jane Gabbett on 7/28/2014
Tyson Foods has reached a definitive agreement with JBS SA to sell its poultry businesses in Mexico and Brazil, the company announced today.
The transaction is valued at $575 million and will be paid for in cash. Tyson Foods officials currently expect the sale, which is subject to regulatory approval, to be completed by the end of 2014. JBS and Pilgrim’s Pride currently expect to maintain all the operations working to capacity with the existing workforce and to maintain all labor contracts in both countries.
“Although these are good businesses with great team members, we haven’t had the necessary scale to gain leading share positions in these markets,” said Donnie Smith, president and CEO of Tyson Foods. “In the short term, we’ll use the sale proceeds to pay down debt associated with our acquisition of Hillshire Brands. Longer term, we remain committed to our international business and will continue to explore opportunities to extend our international presence.”
Tyson Foods’ Mexican business will be acquired through Pilgrim’s Pride, whose majority owner is JBS USA Holdings Inc., a wholly owned subsidiary of JBS SA. The Brazilian business is to be acquired through JBS Foods, also a wholly owned subsidiary of JBS SA.
The Mexican business, known as Tyson de México, is a vertically integrated poultry business based in Gomez Palacio in North Central México. It has three plants and employs more than 5,400 people in its plants, offices and seven distribution centers.
The acquisition of Tyson’s Brazil operations, known as Tyson do Brasil, involves three fully integrated production plants, two in Santa Catarina and one in the state of Parana. Tyson do Brasil employs 5,000 people.
Tyson Foods will continue to serve customers in Mexico. The company will supply them with U.S.-produced chicken as well as chicken produced in Mexico, in part through a co-packaging arrangement with Pilgrim’s Pride.
Tyson Foods intends to remain focused on growing its poultry operations in Asia, which include three poultry plants in China and majority ownership of two poultry plants in India. Combined, these Asian operations employ approximately 5,000 people.
On Friday, Tyson announced it plans to close three production facilities in the United States that are part of its prepared foods business.
In June Tyson agreed to buy Hillshire Brands for $63 a share, creating a $40 billion food company and adding powerful brands to its portfolio.