Monday, May 6, 2024
Tyson Foods to divest China poultry operations.

Tyson Foods to divest China poultry operations.

Tyson Foods, a U.S. meat and processed food maker, is planning to sell its China poultry business, according to three sources familiar with the matter. The company has hired Goldman Sachs to advise on the sale and has sent preliminary information to potential buyers, including private equity firms. While the valuation for the China poultry business has not been disclosed, it has annual sales of approximately $1.1 billion. Tyson Foods and Goldman Sachs declined to comment on the matter.

No specific reason was provided for Tyson’s decision to sell its China poultry business. Calls to Tyson Foods’ China headquarters went unanswered. However, analysts have cited China’s challenging meat market, with squeezed livestock farm margins and increased feed prices due to the COVID-19 pandemic and the Russia-Ukraine conflict, as factors that may have influenced Tyson’s move.

In recent years, many multinational companies have divested their China businesses or reduced their holdings due to difficulties in generating desired profits amidst slower economic growth, strong local competition, and geopolitical challenges, according to banking sources. In the food industry, companies like Cargill and Reckitt Benckiser Group have also divested their China businesses.

Tyson Foods, which opened its first factory in China in 2001, currently operates throughout the industry chain in the country, from breeding and slaughtering to processing and distribution. The company has four research and development centers, several processing plants, and dozens of breeding farms in China. In June, Tyson Foods launched two new factories in China, one focusing on processed foods and the other on frozen and heat-processed foods.

According to its latest financial report, Tyson Foods reported $39.5 billion in total sales for the nine months ended July 1, with $1.9 billion from its international and other business segment, which includes its China operations. Foreign companies have divested a total of $8.4 billion of Chinese assets across all sectors so far this year, following $13.5 billion of disposals in 2022, according to Dealogic data.

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