PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 12:00 UK, 28th Jul 2014, by Agrimoney.com
Tyson sells Brazil, Mexico poultry arms to JBS

US-based Tyson Foods acknowledged defeat in efforts to conquer Latin America's poultry market, the backyard of rival JBS, as it sold to its competitor operations in the region representing, by staff levels, most of its foreign operation.

Tyson Foods, which is cementing its position in its home US market through the $8.55bn purchase of Hillshire Brands, said it had agreed to sell its Brazilian and Mexican operations to JBS for $575m in cash.

"In the short term, we'll use the sale proceeds to pay down debt associated with our acquisition of Hillshire Brands," Donnie Smith, the Tyson Foods chief executive, said.

Tyson beat Pilgrim's Pride, the US chicken group controlled by JBS, to win the Hillshire takeover.

'Lack of scale'

However, Mr Smith acknowledged that the businesses in Brazil, where Tyson is marketed as the brand that "o mundo todo aprova", meaning "the whole world approves", and in Mexico, where it has been for 20 years, had fallen short of matching Tyson's strength in its domestic market.

"Although these are good businesses with great team members, we haven't had the necessary scale to gain leading share positions in these markets," he said.

The businesses sold employ more than 10,000 staff, leave Tyson's international poultry business comprising Chinese and Indian operations employing a combined 5,000 people.

"Longer term, we remain committed to our international business and will continue to explore opportunities to expand our international presence," Mr Smith said.

Appeal of chicken

For JBS, meanwhile, the acquisition offers an opportunity to extend the reach into poultry for a group whose growth into the world's largest meatpacker was built around beef.

Indeed, the deal comes only two weeks after JBS paid R$246.0m ($111m) to purchase Brazilian poultry assets from Céu Azul Alimentos.

JBS said that it had paid $175m for Tyson's Brazilian business, which will lift its sales by about $350m, with $400m paid for the Mexican division.

The Mexican unit, Tyson de México, will be folded into Pilgrim's Pride, which already has some operations in the country, and expected a boost of $650m to its revenues from the deal.

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