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Tyson Foods to Buy Keystone for $2.16B Cash

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Tyson Foods Inc. of Springdale announced Monday that it will buy the Keystone Foods business from Marfrig Global Foods of São Paulo, Brazil, for $2.16 billion in cash.

Keystone is headquartered in West Chester, Pennsylvania, and supplies chicken, beef, fish and pork to quick-service restaurant chains, including McDonald’s Corp., and retailers and convenience stores. Its portfolio includes chicken nuggets, wings and tenders; beef patties; and breaded fish fillets.

The deal comes as Marfrig sharpens its focus to beef only and Tyson continues to double down on its role as a premier supplier of protein. It’s Tyson’s biggest acquisition since last year’s $4.2 billion purchase of AdvancePierre Foods Holdings Inc. of Cincinnati, but it’s made other purchases in the interim.

Tyson’s purchase includes six processing plants and an “innovation center” in the U.S., but does not include a beef patty processing plant in Ohio. It also includes eight plants and three innovation centers in China, South Korea, Malaysia, Thailand and Australia.

Shares of Tyson (NYSE: TSN) traded slightly higher on Monday.

“Keystone is a leading global protein company and will be a great addition to Tyson Foods,” Tyson Foods President and CEO Tom Hayes said in a news release. “This acquisition will expand our international presence and value-added production capabilities and help us deliver more value to our foodservice customers.

“Keystone provides a significant foundation for international growth with its in-country operations, sales and distribution network in high growth markets in the Asia Pacific region as well as exports to key markets in Europe, the Middle East and Africa. We look forward to serving customers with these additional capabilities and to welcoming Keystone’s dedicated team members to the Tyson Foods family.”

Keystone employs about 11,000 people. According to Tyson, the company generated annual revenue of $2.5 billion and adjusted EBITDA of $211 million in the last 12 months ending June 30.

Tyson expects the deal to be accretive to earnings per share in the third year and accretive to adjusted EPS in the first year, excluding transaction-related costs and the incremental depreciation and amortization associated with the transaction. It said the deal will generate annual synergies of $50 million by the third year, “driven by operational efficiencies, procurement savings, distribution and supply network optimization and other opportunities.”

Tyson’s board has approved the purchase, which is expected to close in mid-fiscal 2019.

Word of the deal had been spreading for weeks. Bloomberg reported in July that another Arkansas company, George’s Inc. of Springdale, had submitted a bid. On Friday, Bloomberg, citing unnamed sources, reported that a deal was imminent.

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