WASHINGTON, D.C., July 28, 2014 - Pilgrim’s Pride, the
nation’s second largest poultry integrator, said today that it has agreed to buy
all poultry facilities in Mexico from Tyson Foods, the No. 1 poultry processor,
in a cash transaction valued at $400 million. Pilgrim’s expects the deal to add
some $650 million in annual revenue to its existing
In a parallel transaction, Tyson sold its
“Although these are good businesses with great team members, we haven’t had the necessary scale to gain leading share positions in these markets,” said Donnie Smith, president and CEO of Tyson Foods. “In the short term, we’ll use the sale proceeds to pay down debt associated with our acquisition of Hillshire Brands. Longer term, we remain committed to our international business and will continue to explore opportunities to extend our international presence.”
Completion of the transactions would add three Tyson de Mexico
The acquisition is part of Pilgrim’s “growth strategy of disciplined acquisitions that add company value for our shareholders and strengthen our strategic position in the market,” says Pilgrim’s CEO Bill Lovette. Upon regulatory approval and closing, Pilgrim’s anticipates maintaining operations at capacity with the existing workforce and labor contracts.
Tyson says it will continue to serve customers in
Tyson’s acquisition of Hillshire Farms, a further processing operation with national distribution of retail-ready meat and poultry products, is under review by Department of Justice (DOJ) antitrust regulators for its potential effect on meat industry concentration.
Late last week, a coalition of 82 activist organizations
urged DOJ to extend its review of the proposed takeover of Hillshire, which
would join the largest
“Fewer buyers of hogs and sows result in a less competitive market for family farmers,” NFU President Roger Johnson said. “The rapid consolidation of market power in the hands of just a few pork processors resulted in the loss of more than 90 percent of all hog farms since 1980. Tyson's takeover of Hillshire certainly warrants further investigation by the Department of Justice and should be stopped. It's time for the Justice Department to enforce our anti-trust laws."
The activists said DOJ normally reviews such acquisitions on an accelerated 14-day timeline rather than its standard 30-day scrutiny. The complexity of the proposed merger warrants a more comprehensive review because of Tyson’s significant hog and sow purchasing and marketing and because the proposed merger would enable Tyson to undermine Hillshire’s sausage and lunchmeat rivals by disrupting their access to pork supplies, the activists said.
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