How Tyson Foods Plans to Keep on Growing

By Chris Lange Updated Jan 11, 7:08PM EST · Published Aug 20, 8:40AM EDT

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How Tyson Foods Plans to Keep on Growing — © xrrr / iStock

Tyson Foods Inc. (NYSE: TSN) announced early on Monday that it had reached a definitive agreement to acquire the Keystone Foods business from Marfrig Global Foods. The transaction is all in cash and is valued at $2.16 billion. The deal is expected to close in mid-fiscal 2019.

The acquisition of Keystone, a major supplier to the growing global foodservice industry, is Tyson Foods’ latest investment in furtherance of its growth strategy and expansion of its value-added protein capabilities. Keystone supplies chicken, beef, fish and pork to some of the world’s leading quick-service restaurant chains, as well as retail and convenience store channels.

The acquisition includes six processing plants and an innovation center in the United States, with locations in Alabama, Georgia, Kentucky, North Carolina, Pennsylvania and Wisconsin. (It does not include the beef patty processing plant in Ohio.) It also includes eight plants and three innovation centers in China, South Korea, Malaysia, Thailand and Australia.

Keystone employs roughly 11,000 people. It generated revenue of $2.5 billion and adjusted EBITDA of $211 million in the 12 months ending June 30, 2018. Tyson Foods has a market cap of about $23 billion.

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Tyson Foods expects the acquisition to be accretive to adjusted earnings per share in the first year, excluding transaction-related costs. It also expects to generate annual synergies of about $50 million by the third year of the acquisition.

Tom Hayes, president and CEO of Tyson Foods, commented:

Keystone is a leading global protein company and will be a great addition to Tyson Foods. This acquisition will expand our international presence and value-added production capabilities and help us deliver more value to our foodservice customers. Keystone provides a significant foundation for international growth with its in-country operations, sales and distribution network in high growth markets in the Asia Pacific region as well as exports to key markets in Europe, the Middle East and Africa. We look forward to serving customers with these additional capabilities and to welcoming Keystone’s dedicated team members to the Tyson Foods family.

Shares of Tyson closed at $62.40 on Friday, with a consensus analyst price target of $71.13 and a 52-week trading range of $56.79 to $84.65.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.