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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Tyson Apparently in Acquisition Talks With Foster Farms

02/05/2019

News reports in financial newsletters and in the Modesto Bee suggest that Tyson Foods ranked Number 1 in broilers processed and RTC in the U.S. is eyeing family-held Foster Farms of California, ranked number 11, as an acquisition.  Tyson Foods reports on Q1 of FY 2019 on Thursday recently closed the acquisition of Keystone Foods ranked 12 in the U.S. but also with facilities in Asia for $2.2 billion.

 

Foster Farms has operated for 80 years under family management until they appointed Laura Flanagan as president and CEO in 2016. The Company purchased broiler assets of Zacky Farms in 2001.

 

The combination of Tyson (with Keystone) and Foster would represent close to 48 million broilers per week or 30 percent of 167 million U.S. birds and 22 percent of RTC based on the live weights, yields and numbers slaughtered by the respective companies.

 

News reports have mentioned a purchase consideration of $2 billion although neither side has issued any statement concerning the status of negotiations. Purchasing a family-owned enterprise is always a difficult undertaking, depending on the breadth and structure of the shareholding. The magnitude of the combined market share of Tyson and Foster will raise FTC scrutiny. Perhaps a deal in 2019 would be more favorably considered than a subsequent transaction in the future under a different Administration.

 

The acquisition of Foster would create a trans-Continental presence for Tyson that could leverage their presence on the West Coast to produce and distribute a wide range of protein products. The Keystone transaction offered geographic, market and strategic advantages for their $2.2 billion. The same could be said for the potential synergy from the acquisition of Foster Farms.


 
Copyright 2019 Simon M. Shane