RSS   Newsletter   Contact   Advertise with us
Post Online Media
Post Online Media Magazine

Tyson Foods buys Keystone Foods for $2.16 billion

Share on Twitter Share on LinkedIn
Staff Writer |
Tyson Foods
Acquisition   Keystone is a major supplier to the growing global foodservice industry

Tyson Foods announced it has reached a definitive agreement to buy the Keystone Foods business from Marfrig Global Foods for $2.16 billion in cash.

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.

Headquartered in West Chester, Pennsylvania, 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. Its value-added product portfolio includes chicken nuggets, wings and tenders; beef patties; and breaded fish fillets.

The acquisition includes six processing plants and an innovation center in the U.S. 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, which employs approximately 11,000 people, generated annual revenue of $2.5 billion and Adjusted EBITDA of $211 million in the last 12 months ending June 30, 2018, excluding non-controlling interest and other adjustments1.

During the same period, the company generated approximately 65 percent of its revenue from U.S.-based production and the remaining 35 percent from its Asia Pacific plants.

Tyson Foods expects the acquisition to be accretive to GAAP EPS in the third year and accretive to adjusted EPS in the first year excluding transaction-related costs as well as the incremental depreciation and amortization associated with the transaction.

It also expects to generate annual synergies of approximately $50 million by the third year of the acquisition, driven by operational efficiencies, procurement savings, distribution and supply network optimization and other opportunities.

Terms and ClosingThe acquisition will be funded through a combination of existing liquidity and proceeds from the issuance of new debt.

Initial leverage metrics are expected to be well within levels appropriate for the company’s existing investment-grade credit ratings. The company plans to use its cash flows to pay down debt to continue to support its credit ratings and to strengthen its balance sheet.

The transaction, which has been approved by Tyson Foods’ board of directors, is expected to close in mid-fiscal 2019. It is subject to customary closing conditions, including regulatory approvals.

What to read next
POST Online Media Contact