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Tyson still has 'several billions' it could deploy for deals, CFO says


IFRS 9 Impairment How It Impacts Your Corporation And How We Can Help

Tyson still has 'several billions' it could deploy for deals, CFO says

On the heels of some major acquisitions, Tyson Foods Inc.'s top executives said the company is still open to serving up new deals.

Even after securing funding for acquisitions that it has committed to, Tyson will have "several billions'" worth of assets that it could use to make additional deals, Executive Vice President and CFO Stewart Glendinning told analysts during a call to discuss the company's fiscal first-quarter results Feb. 7.

Tyson is planning to secure bond funding later this month for its recent acquisitions, Glendinning said, adding that ratings that the company receives on that debt will determine its capacity for additional deals.

CEO Noel White said the meat processor would be selective with any potential acquisition targets, especially as it works to integrate multiple deals already announced.

"It would have to deliver strong financial returns [and] in a geography that might be attractive," White said of future targets. White did not comment specifically on a report that Tyson approached privately held meat processor Foster Farms with a buyout offer worth $2 billion.

The company is "focused on prepared [foods] and, to a lesser degree, on the international side" when it comes to acquisitions, White said.

Tyson has beefed up its international operations with recent acquisitions. The company said Feb. 6 that it plans to pay $340 million in cash for Brazilian meat processor BRF SA's processing operations in Thailand and Europe.

That deal came slightly more than two months after Tyson completed its purchase of Marfrig Global Foods SA's Keystone Foods LLC for $2.16 billion, which gave the Springdale, Ark.-based company a larger footprint in eastern Asia.

In addition to cuts of raw meat, Foster Farms' product portfolio includes prepared products such as flavored chicken snacks and ready-to-eat main dishes.

Tyson is banking on a rise in global protein consumption, especially outside the U.S. The food company on Feb. 7 raised the sales outlook for its 2019 fiscal year to $43 billion, up from its previous target of $41 billion.

Lower prices for raw chicken are likely to weigh on the adjusted operating margin for Tyson's chicken segment, while higher prices for beef are likely to expand the margin within that segment, White told analysts.

Shares of Tyson declined 2.2% to $59.54 in midday trading Feb. 7.