Greeley-based Pilgrim’s Pride lost the bidding war for Hillshire Brands to Tyson Foods, but on Monday said it has reached an agreement to purchase Tyson’s poultry business in Mexico.
JBS SA, the parent to Pilgrim’s Pride, will pay $575 million for Tyson poultry units in Mexico and Brazil. The deal is expected to close by the end of the year.
Tyson Foods’ Mexican business will be acquired through Pilgrim’s Pride. The Brazilian business is to be acquired by JBS Foods, also a JBS SA subsidiary.
Tyson will use the money to pay down debt related to its $7.75 billion purchase of Hillshire Brands, president and CEO Donnie Smith said.
Tyson said JBS and Pilgrim’s Pride expect to keep the Brazil and Mexico operations working to capacity with the existing workforce. The company also said labor contracts in both countries will be maintained.
Earlier this year, both Pilgrim’s Pride and Tyson Foods made bids for Hillshire Brands Co., with Tyson winning the bidding war after Pilgrim’s Pride withdrew its proposal to acquire Hillshire in early June.
The Mexican business, Tyson de Mexico, is based in Gomez Palacio in north central Mexico. It has three plants and employs more than 5,400 people at its plants, offices and seven distribution centers.
Tyson’s Brazil operations, Tyson do Brazil, involves three production plants, two in Santa Catarina and one in the state of Parano. The Brazilian operation employs 5,000 people.
Bill Lovette, president and CEO of Pilgrim’s Pride Corp. CEO Bill Lovette said the deal demonstrates Pilgrim’s “continued commitment to our growth strategy of disciplined acquisitions.” The acquisitions, Lovette said in a statement, add company value for Pilgrim’s shareholders and strengthen the company’s position in the market.
Tyson said it intends to focus on growing its poultry business in Asia, which includes three poultry plants in China and majority ownership of two poultry plants in India.
“Longer term, we remain committed to our international business and will continue to explore opportunities to extend our international presence,” Smith said.
Meanwhile, Tyson, the biggest U.S. meat processor, said it will close three struggling U.S. plants. A plant in Cherokee, Iowa, where 450 people work, will close Sept. 27. Plants in Santa Teresa, N.M., where 200 people work, and in Buffalo, N.Y., which employs 300, are expected to shutter in the first half of 2015.
Howard Pankratz: 303-954-1939, hpankratz@denverpost.com or twitter.com/howardpankratz
The Associated Press contributed to this report.
