- Several companies, including Tyson Foods Inc., Cargill Inc. and Fosum International, are interested in acquiring Keystone Foods, the company that supplies chicken nuggets to McDonald’s, Bloomberg News reported.
- Marfrig Global Foods SA, based in Brazil, plans to sell Keystone and raise more than $3 billion to help pay down debt and to acquire a controlling share in National Beef Packing, unnamed sources told the news organization. A transaction could happen during the next few weeks.
- Marfrig bought Keystone for $1.26 billion in 2010. A Tyson spokesman declined to comment on the rumor, while Cargill didn't have a comment.
As meat and poultry consumption in the U.S. continues to rise, companies are looking for ways to expand their reach.
A purchase of Keystone would be a logical acquisition for Tyson in that it falls within their poultry, beef and pork areas of expertise. The Arkansas company could potentially use its existing relationships to supply meat and poultry products to McDonald's and other restaurants and CPG companies. Tyson also is intimately familiar with the protein space and could leverage that insight after acquiring Keystone. The buyer could even consider working with McDonald's to bring the nuggets to retail shelves like PF Chang's, Arby's and Bob Evans have done with some of their products.
The deal also seems to make sense for Cargill. As reported in the Business Journal, Minnesota-based Cargill already supplies Illinois-based McDonald’s, so the sale could naturally expand that relationship.
Marfrig seems ready to focus on the beef segment of the industry. Marfrig Beef is mostly responsible for the slaughter, manufacture and distribution of beef and lamb meat, Forbes notes. Selling off Keystone — a division that manufactures multi-protein foods to sell to restaurant chains such as McDonald’s, KFC and Taco Bell, as well as to companies such as Campbell’s Soup — in order to focus on beef production seems like a smart move for Marfrig, especially with its aqusition of National Meat Packing.
Data from the U.S. Department of Agriculture shows Americans are consuming more protein than ever. Total red meat and poultry consumption is expected to increase to 220.4 pounds per person in 2018 from 216.8 pounds a year earlier.
With a sale apparently still in its early stages, it’s hard to predict who will win the race to buy Keystone, but with the food company's chicken nuggets and other items in hot demand, the new owner will get a business with a predictable source of revenue and products that people want.