Reports: Tyson Foods considers selling China operations

by Kim Souza ([email protected]) 3,665 views 

Less than two weeks after committing to expanding its international presence after two big consecutive quarterly losses, Tyson Foods is reportedly exploring the sale of its business in China.

Reuters sourced the information to three people with knowledge of the matter, but Tyson Foods declined to comment, citing confidential information. Tyson has reportedly hired Goldman Sachs to advise on the sale. Preliminary information has been sent to potential buyers, Reuters reports, noting the sale process is at an early stage.

Tyson CEO Donnie King recently told Talk Business & Politics the company was committed to its international expansion, which includes the construction of 7 new plants outside the U.S., six of which are located in Asia. Three of the new plants are located in China as well as a major addition to another facility there.

King said Tyson viewed the international business as a growth engine as 90% of protein consumption growth will come from outside the U.S., and 60% of the volume growth will come from Asia over the next five years. He did say the plant construction and ramp-up were behind schedule, but the three new plants opened this summer and production is ramping up. Tyson has been invested in China since 2001, with its first processing center supporting customers like Kentucky Fried Chicken and Walmart.

Tyson’s China headquarters is in Shanghai, and the business includes three research and development centers, seven processing plants, and dozens of breeding farms allowing for a fully-integrated business. While chicken is the majority of the business in China, Tyson also has smaller beef and pork operations.

Tyson’s business in China has annual sales of about $1.1 billion. If Tyson is able to sell its business in China, the company would still have some exposure in Asia Pacific through the two acquisitions the company made between 2017 and 2018. That includes chicken plants in Malaysia and Thailand and beef business in Brisbane, Australia.

Tyson’s divestiture interest also comes amid struggles in its chicken, pork and beef segments which resulted in a $417 million loss in the third quarter ending July 1. That loss followed a $97 million loss in the second quarter. Tyson also announced four U.S. plant closings bringing the total closures this year to six. The meat giant also cut 15% of its senior leadership in April and 10% of corporate office jobs were eliminated as a result of consolidating the corporate campuses to Springdale.

Shares of Tyson Foods (NYSE: TSN) closed Thursday at $54.08, up 1.27%. Over the past 52 weeks, the shares have traded between $47.11 and $82.03. Year to date, the stock price is down about 13%.