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Tyson Foods buys Keystone Foods business from Marfrig Global Foods for $2.16 billion.
Posted on August 21, 09:57
Tyson Foods buys Keystone Foods for $2.16 billion
The latest investment in Keystone is part of the company's growth strategy and expansion of value-added protein capacity.
The acquisition includes six processing plants and an innovation center in the United States with facilities in Alabama, Georgia, Kentucky, North Carolina, Pennsylvania and Wisconsin. In addition, Tyson Foods will also own eight factories and three innovation centers in China, South Korea, Malaysia, Thailand and Australia.
Tyson Foods expects the acquisition to be accretive to GAAP earnings per share in the third year and accretive to adjusted earnings per share in the first year, excluding transaction-related costs and incremental depreciation and amortization associated with the transaction.
The company expects to generate annual synergies of approximately $50 million in the third year following the acquisition, driven by operational efficiencies, procurement savings, distribution and delivery network optimization and other capabilities.
“Keystone is a leading global protein company and will be a great addition to Tyson Foods,” said Tom Hayes, president and CEO of Tyson Foods. “This acquisition will expand our international presence and value-added manufacturing capabilities and help us deliver more value to our foodservice customers. Keystone provides an important foundation for international growth with its national operations, sales and distribution network in fast-growing markets in Asia Pacific. and exports to key markets in Europe, the Middle East and Africa. We look forward to offering customers these additional opportunities and welcoming Keystone's dedicated team members to the Tyson Foods family.”
Keystone Foods is located in West Chester. The company supplies chicken, beef, fish and pork to some of the world's leading quick-service restaurant chains, as well as retail and convenience stores. The portfolio includes chicken nuggets, wings and tenders; steaks; and breaded fish fillets.
Keystone Foods employs nearly 11,000 people and had annual revenues of $2.5 billion and adjusted EBITDA of $211 million for the trailing twelve months ended June 30, 2018, excluding minority interests and other adjustments.
During the same period, the company generated approximately 65% of its revenue from U.S. manufacturing and the remaining 35% from its factories in the Asia-Pacific region.
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Tyson Foods' Acquisition of Keystone Foods
Overview of the Acquisition
Tyson Foods is acquiring Keystone Foods from Marfrig Global Foods for $2.16 billion. This acquisition is part of Tyson Foods' growth strategy and aims to expand its value-added protein capabilities. The deal includes six processing plants and an innovation center in the U.S., located in Alabama, Georgia, Kentucky, North Carolina, Pennsylvania, and Wisconsin. Additionally, Tyson Foods will gain ownership of eight plants and three innovation centers in China, South Korea, Malaysia, Thailand, and Australia.
Financial Projections and Synergies
Tyson Foods expects the acquisition to be accretive to GAAP EPS in the third year and accretive to adjusted EPS in the first year, excluding transaction-related costs and incremental depreciation and amortization associated with the transaction. The company anticipates generating annual synergies of approximately $50 million by the third year of the acquisition, driven by operational efficiencies, procurement savings, distribution, and supply network optimization, among other opportunities.
International Expansion and Market Presence
The acquisition of Keystone Foods is expected to expand Tyson Foods' international presence and value-added production capabilities. It will provide a significant foundation for international growth, with in-country operations, sales, and distribution networks in high-growth markets in the Asia Pacific region, as well as exports to key markets in Europe, the Middle East, and Africa.
Keystone Foods' Portfolio and Operations
Keystone Foods, based in West Chester, supplies chicken, beef, fish, and pork to leading quick-service restaurant chains, retail, and convenience store channels. Its product portfolio includes chicken nuggets, wings, tenders, beef patties, and breaded fish fillets. The company employs nearly 11,000 people and has an annual revenue of $2.5 billion, with 65% of its revenue coming from U.S.-based production and the remaining 35% from its Asia Pacific plants.
In conclusion, the acquisition of Keystone Foods by Tyson Foods represents a strategic move to enhance its global market presence, expand its value-added protein capabilities, and achieve significant synergies through operational efficiencies and procurement savings.
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