Tyson Foods has announced its agreement to acquire the European and Thai operations of Brazilian meat giant BRF S.A. for $340 million.
The deal includes four vertically integrated processing facilities in Thailand, supported by a feed mill, a hatchery, breeder farms, and contract growing operations that supply live birds for the four poultry processing plants. These plants provide a range of fresh and frozen, value-added raw and fully cooked poultry products including specialized cuts for retail and food service customers across Asia and other export markets.
Additional assets acquired through the deal include one processing facility in the UK, and one processing facility in the Netherlands – both of which have in-house innovation capabilities for the development of further-processed chicken products for sale across Europe.
“It’s estimated that approximately 90 percent of global protein consumption growth will occur outside the United States, with 60 percent of the volume growth coming from Asia over the next 5 years,” said Donnie King, group president of International for Tyson Foods. “Increasing our international footprint with in-country operations and export capabilities will help Tyson Foods strategically access new markets and better serve the growing global demand for our value-added protein.”
Both Sides of the Fence
Tyson Foods’ has read the writing on the consumer wall, and noted the growing upswing in popularity of protein – both plant-based and animal-based proteins – and has taken steps to advance its presence in all areas.
In October 2016, Tyson, which is the largest meat company in the U.S. by sales, became the first global meat company to invest in a meat alternative startup when it acquired a five percent stake in plant-based meat alternative producer Beyond Meat.
In December 2017, Tyson became a repeat investor, partaking in a $55 million Series F for the company along with venture capital firm Cleveland Avenue, which was founded by former McDonalds CEO Don Thompson.
“We’re enthusiastic about this investment,” said Monica McGurk, Tyson Foods’ executive vice president of Strategy and New Ventures & president of Foodservice at the time, adding, “which gives us exposure to a fast-growing segment of the protein market. It meets our desire to offer consumers choices and to consider how we can serve an ever-growing and diverse global population…”
However, Tyson has remained committed to animal-based proteins as well, investing $850 million in capital in May of last year to acquire the poultry rendering and blending assets of American Proteins and AMPRO Products.
Only one week later, the company announced it had agreed to acquire Tecumseh Poultry, one of the leading organic branded chicken producers in the U.S., and maker of the Smart Chicken brand.
Founded in 1998, Tecumseh produces air-chilled, fresh organic chicken as well as deli chicken products and chicken sausages through its facilities in Tecumseh and Waverly, Nebraska, as well as its live operations.
Very soon after the Tecumseh deal, Tyson went on to announce another bold move: its agreement to acquire Keystone Foods from Marfrig for $2.16 billion in cash.
Headquartered in Pennsylvania, Keystone supplies value-added chicken, beef, fish, and pork products to some of the top global quick-service restaurant chains, as well as retail and convenience stores.
Although the sale of protein products to restaurants is less profitable than selling branded products to consumers, Market Watch points out that the business is rather stable, and will provide Tyson Foods with an insulation against market difficulties currently being faced by the wider U.S. meat industry. In addition to this strategic advantage, it is also through Keystone’s strong presence in key high-growth markets that Keystone can act as a conduit of growth for Tyson.
Indeed, Tyson states that like Keystone, the deal for the BRF assets builds on the company’s growth strategy to expand its value-added protein offerings across international markets.
“As noted when we acquired Keystone Foods on November 30, we believe some of our biggest growth opportunities are in value-added foods and international markets,” said Noel White, president and CEO of Tyson Foods. “In addition to domestic benefits, the Keystone acquisition provided us with a scalable production platform in the Asian poultry market. The acquisition of these BRF facilities will help complement and strengthen our presence in Thailand, and provide new capabilities in Europe, enhancing our ability to serve growing global demand for value-added protein.”
-Lynda Kiernan