Tyson Agrees to Sell Latin America Chicken Assets to Pilgrim's Pride
29 Jul 2014 --- Pilgrim's Pride Corporation announced that a definitive agreement has been entered to purchase the totality of the poultry businesses of Tyson Foods, Inc. in Mexico. Pilgrim's Pride, is majority owned by JBS USA Holdings, Inc., a wholly owned subsidiary of JBS S.A.
The transaction is valued at US$400 million and will be paid for in cash, pending regulatory approvals by the competent authorities. Pilgrim's Pride Mexico anticipates incremental annual revenue of approximately $650 million as a result of the transaction.
Tyson de Mexico, a vertically integrated poultry business based in Gomez Palacio in North Central Mexico, has operated for more than 20 years. The company includes three plants, seven distribution centers and employs more than 5,400 team members.
"Today's announcement demonstrates Pilgrim's continued commitment to our growth strategy of disciplined acquisitions that add company value for our shareholders and strengthen our strategic position in the market," said Bill Lovette, President and CEO of Pilgrim's Pride Corporation.
Once the sale is completed, PPC currently expects to maintain the operations working to capacity with the existing workforce, maintaining labor contracts in place in both countries.
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 team members 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 team members.
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.
Yesterday it emerged that as part of ongoing efforts to improve the performance of its prepared foods business, Tyson will discontinue operations at three facilities, the company announced today. The closings will enable the company to use more of the available production capacity at some of its other prepared foods plants.
Tyson Foods’ Cherokee, Iowa, plant will close effective September 27, while the company’s Buffalo, New York, and Santa Teresa, New Mexico, plants are expected to cease operations during the first half of calendar 2015. The decision will affect approximately 950 people, including 450 at Cherokee, 300 at Buffalo and 200 at Santa Teresa.
