SPRINGDALE, Ark., — Mexico’s Federal Economic Competition Commission has approved the sale of Tyson Foods, Inc.’s (NYSE:TSN) poultry business in Mexico to Pilgrim’s Pride, which is part of a wholly-owned subsidiary of JBS SA (BM&FBovespa – Novo Mercado:JBSS3) (OTCQX:JBSAY).
The commission, which has been reviewing the transaction, recently voted to permit the deal to proceed.
“We appreciate the attention and efforts of the Commission and will now move forward with Pilgrim’s Pride to complete the deal,” said Tyson President and CEO Donnie Smith. “We’ve not set a closing date but believe it will be soon.”
Tyson Foods and Pilgrim’s Pride reached a definitive agreement on the sale last July. The Mexican business, known as Tyson de México, is a vertically integrated poultry business based in Gomez Palacio in North Central México. It employs more than 5,400 people in its offices, three plants and seven distribution centers.
After the sale is completed, 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.
Executives from Tyson Foods, told investors at the Goldman Sachs Consumer Staples Conference that the company is transforming from a protein processor with one brand to a protein-centric consumer packaged goods company with a house of brands.
Donnie King , president of North American operations and food service, and Dennis Leatherby , executive vice president and chief financial officer, talked about Tyson Foods’ “advantaged brands in advantaged categories.”
“We’re demonstrating more stability and less volatility, and we have a growth story,” King said. “We have the #1 or #2 brands in 13 core categories. Our products are growing 1.6 times faster than the total retail food and beverage category. Ninety-two percent of our frozen product sales and 99 percent of our refrigerated product sales are in categories that are growing, and we were #2 in retail dollar sales growth for the last 52-week period (according to IRI data).”
Leatherby said the company has raised its targets for prepared foods profit improvement initiatives and synergies from The Hillshire Brands Co. acquisition to more than $250 million for the current fiscal year, $400 million in fiscal 2016 and $600 million in fiscal 2017.
Executives from Tyson Foods, told investors at the BMO Farm to Market conference that the company is strategically diversified because it combines branded consumer products, commodity protein production and prepared foods and value-added chicken for the food service industry.
“Tyson Foods is in a preferred position and a unique position,” Donnie Smith, president and chief executive officer, said. “We have the protein consumers want to eat, and we have the #1 brands in those categories. We have the research and development expertise and consumer insights behind those #1 brands to keep driving innovation. We have the raw materials to make those innovative products, and we’re a food company that’s growing.”
“Our goal is to deliver top-tier performance in the food industry,” said Andy Callahan, president of retail packaged brands. “We have an advantaged portfolio with a preferred position to grow ahead of the competition. Our brand building model has a proven track record of growth, and our new product pipeline is robust.”
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