BEIJING (Reuters) - U.S. meat producer Tyson Foods Inc (TSN.N) plans to buy 60 percent of Chinese poultry processor Xinchang Group, located in the coastal province of Shandong, Tyson’s China representative said on Wednesday.
Tyson signed a framework agreement with Xinchang, China’s fifth-largest poultry producer, pending due diligence and government approval, said James Rice, Tyson’s Shanghai-based country manager. He declined to give a value for the deal.
The agreement comes as Tyson builds a plant outside Shanghai to process and package chicken meat from 40 million chickens a year to sell to the prosperous Yangtze River Delta market.
Xinchang, which can process 125 million chickens a year once a new plant opening in August allows it to double capacity, had sales of $289 million last year.
Chinese consumption of meat and poultry has grown during the last two decades as the economy has boomed. More refrigerators allow an increasingly urban population to shift from buying live chickens and meat directly from wet markets to buying fresh and frozen meat from supermarkets.
Tyson shares were battered in the second quarter by strong corn <0#C:> prices. They traded at $15.81 a share on Wednesday, up 3 percent from the beginning of the year.
Editing by Christopher Johnson