(Adds background on JBS, updates share move)
July 28 Tyson Foods Inc said on Monday
it would sell its Mexican and Brazilian poultry businesses to
JBS SA's Pilgrim's Pride for $575 million and use the
proceeds to pay down debt from its pending $7.7 billion purchase
of Hillshire Brands Co.
Tyson, the world's second-biggest meat processor behind
Brazil's JBS, also reported a 4.4 percent increase in
third-quarter profit and forecast sales for the fiscal year
ending September 2015 above Wall Street analysts' estimate.
Shares in Tyson were up 2.7 percent in midday trading.
Tyson in June outbid Pilgrim's Pride with a $63 per share
offer for Hillshire, the maker of Jimmy Dean sausages and Ball
Park hot dogs, in what would be the biggest deal yet for the
global meat business.
Tyson has been laying out plans to quickly pay off debt from
the planned Hillshire purchase after some critics said its offer
price was too high. Pilgrim's Pride declined to raise its bid
from $55, saying that paying more was not in the best interest
Tyson's purchase of Hillshire is expected to close before
The Mexico and Brazil poultry operations being sold were
good businesses for Tyson but lacked "the necessary scale to
gain leading share positions," Chief Executive Donnie Smith said
on a conference call with analysts.
Springdale, Arkansas-based Tyson also reported net income of
$260 million, or 73 cents per share, for the quarter ended June
Revenue rose 10.9 percent to $9.68 billion from $8.73
billion, helped by higher demand for chicken and pork products.
During the quarter, Tyson's supplies of fully cooked chicken
products fell because its existing factories were at capacity
and unable to compensate for problems at two plants.
"We've endured long, sizable production shortfalls in one of
our highest revenue, most profitable business during a time when
high priced beef and pork accelerated the demand for chicken,"
said Smith, who expects the business to fully recover next
Smith said demand for beef was "robust" during the summer
grilling season. Strong demand also helped drive pork prices
higher in the latest quarter, Smith said.
Tyson forecast 2015 net sales of $42 billion, above the
average analyst estimate of $38.75 billion, according to Thomson
Tyson on Friday said it was shuttering three of its U.S.
factories that make processed meat products such as sausages and
The closures were due to changing product needs, an aging
Cherokee, Iowa factory and the distance of the Buffalo, New York
and Santa Teresa, New Mexico plants from their raw material
supply base, the company said on Friday.
Tyson's shares rose $1.06 to $40.60 in afternoon trading on
the New York Stock Exchange.
(Reporting by Lisa Baertlein in Los Angeles and Shailaja Sharma
in Bangalore; Editing by Maju Samuel, Saumyadeb Chakrabarty and