Tyson Foods to acquire AdvancePierre in a deal valued at $4.2 billion

Tyson Foods is acquiring Cincinnati-based AdvancePierre Foods Holdings in a $4.2 billion deal that includes assumption of $1.1 billion in debt, or roughly $40.25 per share.

Tuesday’s (April 25) news comes after Tyson officials announced Monday they are considering the sale of three of its non-protein businesses — Sara Lee Frozen Bakery, Kettle and Van’s.

AdvancePierre produces ready-to-eat lunch and dinner sandwiches, sandwich ingredients, and snacks. Barber Foods is one of AdvancePierre’s most recognizable brands. The company posted full year 2016 net income of $136 million on revenue of $1.56 billion.

“We are very pleased to announce this combination with AdvancePierre. The AdvancePierre leadership team has created significant value through the implementation of a new business management model, focus on quality and service and attention to the growth opportunities in convenience foods,” Tyson President and CEO Tom Hayes said in a statement. “We are always prudently evaluating opportunities to leverage our strengths to drive future growth, whether by divesting non-core, non-protein focused assets – as announced yesterday – or by acquiring companies like AdvancePierre that enhance our capabilities in growing categories.  We believe that AdvancePierre and Tyson are a natural strategic fit and together will accelerate growth for customers by delivering on-trend, high quality products consumers love.”

AdvancePierre has more than 4,000 employees and operates six food production plants in Maine, Ohio and Oklahoma. The company also has food assembly operations in Illinois, North Carolina, Ohio and South Carolina.

Tyson noted in its statement that synergies over three years should total $200 million, with some of that coming from “a consolidated manufacturing footprint, procurement efficiencies, distribution network consolidation, and addressing redundant sales and marketing functions and duplicative corporate overhead.”

“The transaction is expected to generate revenue synergies over time by utilizing Tyson’s product innovation platform and portfolio of brands to drive growth across AdvancePierre’s leading sandwich, entrée, and snack categories,” according to Tyson Foods.

AdvancePierre is the second large acquisition for Tyson Foods in the past three years. Tyson in August 2014 acquired Hillshire Foods in a $8.5 billion deal.

Tyson Foods’ shares (NYSE: TSN) closed Monday at $65.14, and was trending higher in Tuesday’s pre-market moves. During the past 52 weeks the share price has ranged between $55.72 and $77.05.

Shares of AdvancePierre (NASDAQ: APFH) closed Monday at $34.57. During the past 52 weeks the share price has ranged between $22.93 and $36.93.

With respect to value comparisons, Tyson Foods as of Tuesday had a $24.01 billion market capitalization and AdvancePierre had a $2.88 billion market cap.