Tyson Foods to acquire stake in Saudi meat business

Tyson Foods will expand its global footprint with an investment in a Saudi Arabia-based meat company. Tyson will acquire a 15% equity stake in Tanmiah subsidiary Agriculture Development Company (ADC) and a 60% equity stake in Supreme Foods Processing Company.

The transaction is still subject to approval by Kingdom of Saudi Arabia regulators. Springdale-based Tyson did not disclose the amount of the investment but it is within the company’s planned capital spending of $2 billion this fiscal year.

“This investment will enable us to access poultry supplies in Saudi Arabia to meet the growing demand for protein in the Middle East and other markets,” said Chris Langholz, president of International for Tyson Foods. “Expansion into international markets is a key part of our strategic growth plan and we’re pleased to better serve customers in this region.”

ADC is an integrated poultry company producing broiler chickens and operating hatcheries and feed mills. It sells fresh poultry under the Tanmiah brand to retailers and food service customers. Supreme Foods produces a variety of value-added and cooked chicken and beef products with a distribution network spread across the Middle East, including Saudi Arabia, Kuwait, Bahrain, UAE, Oman, Lebanon, and Jordan among others, the release stated.

“The strategic partnership is expected to accelerate Tyson Foods’ and Tanmiah’s growth and generate significant value in the short and long term,” said Tan Sun, president of Tyson Foods APAC. “This will be primarily achieved through further expansion across the value chain, and enhanced product, customer, and geographical diversification, as well as improvement of production and other operational processes. The agreement will also see Tyson Foods and Tanmiah unlock long-term opportunities in the growing Halal food market.”

Tyson said the deal will also allow for increased processing capacity in further processed, higher margin products. It will also enable Tanmiah to introduce complementary products to the market, enhancing the diversification of the product portfolio.

Tanmiah CEO Zulfiqar Hamadani said the transaction will reinforce positioning in the domestic market and enable the company to expand its global footprint through leveraging Tyson Foods’ long-standing relationships with customers worldwide.

“We are excited about the substantial synergies that we expect this transaction will enable us to realize across all stages of the supply chain from sourcing of materials to production and final distribution, in addition to supply chain efficiencies and improved margins. … We are also looking forward to further advancing our technical expertise by collaborating with Tyson Foods to extend innovative and diversified product offerings to a broader base of customers in the Kingdom and abroad.,” said Ahmed Bin Sharaf Osilan, Tanmiah managing director.

Tyson said the financial impact of the transaction is expected to be reflected in Tanmiah’s third-quarter results and is subject to the final payment of costs associated with the transaction.

Tyson said the investment in Tanmiah aligns with the company’s plan to grow international capacity for higher-margin products. This comes on the heels of Tyson’s announcement to open 7 new fully-cooked plants outside the U.S. over the next two years, with six in Asia and one in Europe.

Total Tyson Foods sales from international business and exports represented 14% of total company sales in fiscal year 2021. This included $4.8 billion in U.S. export sales and $2 billion in foreign country revenues.

Shares of Tyson Foods (NYSE: TSN) traded down 85 cents in the morning session at $84.94. For the past 52-weeks, Tyson shares have traded from a high $100.72, and a low $69.88. Year-to-date Tyson shares are down 2.46%, while the broader S&P index is down 19.92%.