Tyson might acquire overseas red meat companies
Tyson Foods, the largest US meat producer, could acquire pork and red meat companies in China, India, Brazil and Argentina, according to a source.
The source said that declining US demand, a growing and relatively fragmented international market, and the ability to save on production costs are likely to drive more acquisitions in those regions.
A spokesperson for the Springdale, Arkansas-based company confirmed it is focused on building its international markets like India, China and South America as geographies for desired expansion.
The source also said that China accounts for approximately 11 percent of Tyson international sales, and is a country particularly targeted for further growth.
A Shanghai-based banker said that Tyson was seeking red meat and possibly pork acquisitions in China, and noted that the sector is open to foreign investment.
The banker said that Chinese companies are often interested in large corporations like Tyson, which have better health and safety standards.
In the latter part of 2008, Tyson purchased 60 percent of Shandong Xinchang Group assets and a new plant outside Shanghai to sell to the Yangtze River Delta market.
According to regulatory documents, Tyson will invest more than US$200 million in that venture.
Shandong, whose business includes chicken and duck breeder and broiler farms, feed mills, and hatcheries, had estimated sales of about US$345 million and is one of three Tyson joint ventures.
According to the source, Tyson has a joint venture with Godrej Agrovet in India, to produce and market poultry in the country, even though the market in India is even less developed than in China, opportunities are believed to exist there.
In September, Tyson agreed to purchase Macedo Agroindustrial and AvÃcola Itaiópolis (Avita), each of which are located in the state of Santa Catarina, as well as 70 percent of Frangobras, located in the state of Parana.
The source also said that Argentina, where Tyson participates in a joint venture with Cresud S.A.C.I.F., includes a feedlot which can lower feed costs for Tyson, and help it further gain access to markets in South America and Europe.
The source added that in addition to lowering costs and granting proximity to key markets, a diverse geographic footprint allows Tyson to continue production in the event of a disease outbreak.
