- Tyson has reached an agreement to buy convenience and ready-to-eat foods company AdvancePierre in a deal valued at $4.2 billion, according to a company statement.
- The agreement, which has been approved by both companies' boards, holds that Tyson will acquire all of AdvancePierre's outstanding common stock for $40.25 cash per share. Oaktree Capital Management, which owns about 42% of these shares, has agreed to tender its shares. The deal, which is subject to customary closing conditions including regulatory approval, is expected to close in Tyson's Q3 2017.
- "We believe that AdvancePierre and Tyson are a natural strategic fit and together will accelerate growth for customers by delivering on-trend, high quality products consumers love," Tyson CEO and President Tom Hayes said in the company statement. "We look forward to welcoming AdvancePierre’s dedicated team members to the Tyson family.”
It's already been an extremely busy week for Tyson. The company said Monday night that it was exploring the sale of some of its non-meat brands — including Sara Lee frozen bakery, Kettle frozen foods and Van's breakfast items. Then Tuesday morning, news of this major acquisition hit.
As a maker of convenient and ready-to-eat sandwiches and snacks, AdvancePierre is firmly positioned in one of the industry's sweet spots. It has not even been a publicly traded company for a year just yet after pursuing an IPO in July 2016. The company has been performing well, with its stock price nearly doubling since its debut at $24 and net sales reaching nearly $1.6 billion in the fiscal year 2016, including 2.5% organic core volume growth.
AdvancePierre, which itself acquired Allied Specialty Foods in October, opened the year with big plans to make more acquisitions. It's not clear if a potential merger with Tyson was part of those plans. AdvancePierre President Christopher Silva told Food Business News at the time that his company had "both the resources to rapidly develop and launch new products, combined with the depth and breadth of customer relationships, to execute a series of wins, that when aggregated, make up the steady growth spelled out in our long-term algorithm.”
The merger could come as a boost to Tyson, which has recently delivered strong earnings and made expansions. In its most recent earnings report in February, the company saw a 27% increase in operating income while sales volume increased 2.4% over the previous year.
CEO Tom Hayes has only been at the helm of Tyson since Jan. 1, but he has made a clear commitment to growing and transforming the company. Tyson announced in February it was cutting antibiotics from branded chicken products, and Hayes has also spoken about how plant-based proteins are the future of the industry. Tyson itself owns a 5% stake in Beyond Meat, the first time a major meat company invested in a plant protein-based company.
The seeds of this acquisition may have been planted before Hayes took over. In September, former Tyson CEO Donnie Smith announced that the company was preparing for its next transformational acquisition. Smith said the company would focus on "protein-centric, branded, value-added" products and categories. AdvancePierre meets all of these requirements — and gives Tyson more of a foothold in the growing convenience foods market.
In early trading on Tuesday, AdvancePierre's stock had risen 9.7% while Tyson's was up 1.9% on news of the deal.