Dive Brief:
- Thomas Hayes, president and chief executive of Tyson Foods, said the company’s management team is continually weighing whether to divest or spin off its fresh beef and pork operations, according to Food Business News. Hayes told reporters that right now, it makes sense for the company to keep the fresh meat business in its portfolio.
- The company operates two distinct units. The first is the value-added chicken and prepared foods business that depends more on innovation and brand building. The other is the more traditional commodity-oriented beef and pork businesses, which is committed to adding value to products, but also stocking the fresh meat cases of retailers with traditional cuts of beef and pork.
- Tyson Foods’ beef and pork units brought in 49% of the company’s total sales volume of nearly $37 billion in its latest fiscal year.
Dive Insight:
After Tyson Foods, Inc.’s acquisition of Hillshire Brands, some analysts believed the company might separate its branded, value-added chicken business from its commodity-oriented beef and pork. For now, it's an option but not one the company's new chief executive appears to be considering anytime soon.
Making a move like this would clearly send a message that Hayes is looking to make a splash in his new role. It also would show his bold mindset, which comes across in some of the other things he is planning, according to the interview. When he first started in his role, Hayes named a few goals for the company, including a focus on innovation, additional acquisitions, and paving the way for the next phase of protein growth.
A split makes sense on many levels. By concentrating on each segment separately, the company can create value and attract interest from different investors attracted to the benefits of each division.
Tyson Foods currently ranks as the No. 1 beef packer and the No. 3 pork packer in the U.S. It's also the largest chicken company.
Hayes has been moving fast to put his mark on the company since he took over, and repositioning the meat processor to better adapt to changing consumer tastes. Last month, Tyson announced it would sell three of its non-protein businesses: Kettle, Van’s and Sara Lee Frozen Bakery. At the same time, Tyson, which for more than a year had hinted at increased acquisition activity, bought AdvancePierre, makers of ready-to-eat sandwiches and snacks, in a deal worth $4.2 billion.
Splitting the company is one that could eventually make sense for Tyson, but Hayes is only going to do so under the right conditions rather than right now. For the time being, the meat units likely have enough synergies where it makes sense for them to remain under the same corporate umbrella.