JBS to buy Tyson Mexico, Brazil operations

by Meat&Poultry Staff
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SPRINGDALE, Ark. – Tyson Foods Inc. plans to sell the company's Mexico and Brazil-based poultry operations to JBS SA. Tyson plans to use proceeds from the sale to pay down debt related to its acquisition of Hillshire Brands Inc.

The all-cash deal is valued at $575 million. Pilgrim's Pride will acquire Tyson de Mexico. Greeley, Colo.-based Pilgrim's is majority owned by JBS. The business in Gomez Palacio includes three plants and employs 5,400 workers. Despite the sale, Tyson will continue to supply chicken to customers in Mexico through a co-packaging arrangement with Pilgrim's. Tyson expects the transaction to close by the end of 2014.

“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 do Brasil includes three production plants, two in Santa Catarina and one in the state of Parana. Tyson do Brasil employs 5,000 workers.

Tyson said 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.

Tyson Foods also announced its financial results for the third quarter ended June 28. The company recorded net income of $260 million, equal to 75 cents per share on the common stock, and an increase compared to the same period during the previous year when the company earned $249 million, equal to 73 cents per share.

Sales for the quarter were $9.68 billion compared with $8.731 billion during the previous year.

“Overall, our results were in line with our expectations,” Smith said. “The Chicken segment could have performed better had it not been for isolated issues at a couple of plants. The Beef segment finished the quarter remarkably well after a difficult start. The Pork segment had a record third quarter despite tight hog supplies due to the PED virus. The Prepared Foods segment had a disappointing quarter primarily due to the continued run up in pork raw material inputs.”
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