Tyson Foods will sell poultry operations in Mexico, Brazil

Tyson Foods Inc (NYSE: TSN) has reached a definitive agreement with JBS SA to sell its poultry businesses in Mexico and Brazil, the company announced.
Valued at $575 million, this transaction will be paid for in cash. Tyson Foods officials anticipate that the sale, which remains subject to regulatory approval, should be completed by the end of 2014. JBS and Pilgrim’s Pride expect to maintain all the operations working to capacity with the existing workforce and to maintain all labor contracts in both nations.
“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 chief executive officer 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.
Known as Tyson de México, the Mexican business is a vertically integrated poultry business based in Gomez Palacio in north central Mexico. 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 US-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 about 5,000 people.