Tyson Foods plans to sell its China poultry business, three people with knowledge of the matter told Reuters.
The company has reportedly hired Goldman Sachs to advise on the sale and sent preliminary information to potential buyers including a number of private equity firms, however, the sale process was said to be at an early stage.
It is unclear what valuation Tyson Foods is seeking for the business, but one of the insiders told Reuters that the China poultry division has annual sales of about $1.1 billion.
The sources declined to be identified due to the confidentiality of the information.
The reports come after Tyson’s announcement earlier this month, that it plans to close four chicken processing facilities in the US. It said the company aimed to “optimise network asset utilisation,” as it adjusted to a decline and slowing demand for certain products.
US agribusiness company Cargill announced in May that it was selling its poultry business in China to private equity firm DCP Capital.
Additionally, Reckitt Benckiser Group signed an agreement in 2021 to offload its Infant Formula and Child Nutrition business in China to private equity firm Primavera Capital Group for $2.2 billion.
According to analysts, Reuters reported that China’s meat market has become increasingly challenging, with livestock farm margins squeezed in the last two years due to weak demand during the COVID-19 pandemic and increased feed prices as a result of the Russia-Ukraine conflict.
The meat giant opened its first factory in China in 2001 with regional headquarters in Shanghai. It now has three R&D centres, seven processing plants and dozens of breeding farms in the region, according to the latest information on its website.
Tyson operates throughout the whole industry chain in China, from “breeding and slaughtering to processing and distribution, providing solutions for chicken, cattle, and pigs”.
The company opened a new factory in June this year, with a focus on processed foods such as cooked chicken and pre-made Chinese cuisine in Nantong and another that focuses on frozen and heat-processed foods in Xiaogan.
Tyson reported $39.5 billion in total sales for the nine months ended 1 July, of which $1.9 billion was from the international and other business segment that includes its China operations.
FoodBev contacted Tyson Foods for comment.
By Gwen Jones
Source: foodbev.com
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