Hillshire acquisition bolstering Tyson
May 4, 2015
by Larry Aylward
The Hillshire Brands acquisition is a vital part of Tyson's brand-building efforts, says Donnie Smith, president and CEO, Tyson Foods.
SPRINGDALE, Ark. – In a teleconference with the media to discuss second-quarter earnings — which exceeded expectations by increasing 10.5 percent to $10 billion when compared to 2014’s second quarter — Tyson Foods Inc. President and CEO Donnie Smith talked about the positive impact that the Hillshire Brands Co. acquisition has had on the Springdale, Ark.-based company.
Tyson acquired Hillshire last summer for what some analysts believe was a hefty price at $8.55 billion. But Smith downplayed the price, noting the acquisition of Hillshire Brands has played an important role in Tyson Foods’ transformation.
“It has been an important step to transform what for us was a private label foodservice-oriented prepared foods business into a branded retail and foodservice value-added prepared foods business,” Smith said, noting the progress in the integration and synergy capture was about $77 million in the second quarter.
Smith acknowledged that Tyson was aggressive in its pursuit of Hillshire Brands. “But as we’ve gotten into it, we’ve seen that Hillshire is every bit or more of what we anticipated it would be,” he added.
The acquisition hasn’t just allowed Tyson to capture synergies, but it has and will continue to be vital in the company’s brand building, Smith noted.
“It allows us to be able to continue to take the raw materials that we have and move them up the value chain and really capitalize on the opportunities we have in several really strong categories,” he said.
Sales in the prepared food segment were up 27.4 percent in the second quarter, driven by increased sales at delis and convenience stores.
“If we look across all of foodservice, we see traffic growing about 3 percent,” Smith said. “If you consider a convenience store the foodservice outlet at retail like you would the deli being the foodservice outlet at the retail grocery store, the growth in deli and convenience stores is outpacing and leading the foodservice growth across a lot of convenient meal occasions. So we are definitely continuing our emphasis on convenience stores, and we think that’s a great growth vehicle for us.”