advertisement

Tyson Foods tosell Latin America assetsaAmid foreign losses

Tyson Foods tosell Latin America assetsaAmid foreign losses

Tyson Foods Inc. agreed to sell poultry businesses in Mexico and Brazil for $575 million as the largest U.S. meat producer shrinks its foreign operations and focuses on the expansion of its prepared foods segment.

JBS's Pilgrim's Pride Corp. unit will acquire the Mexican assets while Sao Paulo-based JBS will buy the Brazilian business, Tyson said today in a statement.

“We haven't had the necessary scale to gain leading share positions in these markets,” Tyson Chief Executive Officer Donnie Smith said in the statement. “We remain committed to our international business and will continue to explore opportunities to extend our international presence.”

Tyson said separately that its international operations will incur about $100 million of losses for the current financial year. The unit posted a $15 million operating loss in the quarter ended June 28 amid lower prices in Mexico and “challenging” market conditions in Brazil and China, the Springdale, Arkansas-based company said.

Earlier this month, Tyson agreed to buy Hillshire Brands Co. for about $7.8 billion, fending off a rival bid from JBS, to add consumer-food brands such as Ball Park hot dogs and State Fair corn dogs. Tyson is trying reduce its reliance on the cyclical commodity-meat business, which is vulnerable to downturns in the price of beef, chicken and pork.

The proceeds of the asset sales announced today will be used to pay down debt associated with the Hillshire deal, Tyson said. Tyson also announced the sale of shares and tangible equity units, each comprising a stock purchase contract and an amortizing note, to help fund the takeover.

Beef Record

In the U.S., Tyson has benefited from record beef prices. It forecast fiscal 2014 sales will rise to about $38 billion, up from an earlier prediction of about $37 billion and ahead of the $36.8 billion average of 10 analysts' estimates compiled by Bloomberg. The company sees revenue rising to about $42 billion in the following fiscal year, after the Hillshire deal is complete.

The shares rose 5.4 percent to $41.67 at 10:16 a.m. in New York after earlier climbing 5.9 percent, the most intraday since May 29.

Third-quarter net income rose to $258 million, or 73 cents a share, from $253 million, or 69 cents, a year earlier. Earnings excluding one-time items were 75 cents a share, less than the 78-cent average estimate.

Tyson said July 25 it plans to close three U.S. plants that make prepared foods with the loss of 950 jobs and utilize production capacity at other sites.

Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.