U.S. food and processed goods manufacturer, Tyson Foods (TSN.N), is reportedly in the process of divesting its poultry business in China, according to sources familiar with the matter. The company has enlisted the services of Goldman Sachs (GS.N) to facilitate the sale and has reached out to potential buyers, including private equity firms. While the valuation sought for the China poultry business remains undisclosed, its annual sales are estimated to be around $1.1 billion.
The sale process is said to be in its early stages, and both Tyson Foods and Goldman Sachs have refrained from commenting on the matter. The decision to sell the business has not been explicitly stated, and those privy to the information have chosen to remain anonymous due to the confidential nature of the details.
This move comes as Tyson Foods undertakes a review of its operations, including the closure of several U.S. chicken plants, as part of cost-cutting measures in response to revenue and profit underperformance.
China’s meat market has posed challenges for multinational companies, with factors such as reduced demand during the COVID-19 pandemic and increased feed prices due to geopolitical tensions impacting livestock farm margins. As a result, multiple multinational corporations have divested or reduced their holdings in China over recent years, often citing difficulties in achieving desired profits amid competitive local markets and economic headwinds.
Recent data from Dealogic indicates that foreign companies have divested a combined $8.4 billion worth of Chinese assets across various sectors in the current year, following $13.5 billion in disposals in the preceding year.
In the food industry, notable instances of divestment include U.S. agricultural giant Cargill’s sale of its China poultry business to private equity firm DCP Capital, and British consumer goods maker Reckitt Benckiser Group’s sale of its China infant formula and child nutrition business to Primavera Capital Group.
Tyson Foods had established its presence in China since 2001, operating multiple research and development centers, processing plants, and breeding farms in the country. The company offers a comprehensive range of products, from chicken and beef to pork and processed foods.
While Tyson Foods continues to focus on its core business, including its remaining operations in the U.S. and international markets, this strategic move reflects the dynamic nature of the global food industry and the company’s response to evolving market conditions.
