Tyson Foods might further delay its plans to expand its broiler business in China, as the company awaits the outcome of its potential acquisition of meat products company Hillshire Brands. Tyson Foods President and CEO Donnie Smith touched on the company’s China plans during a June 9 conference call that dealt mainly with Tyson’s $8.55 billion bid to purchase Hillshire Brands.
Tyson Foods’s offer to purchase Hillshire Brands, which was made June 8, has not yet been accepted by Hillshire. Hillshire Brands stated in a press release that it is considering the Tyson bid, but was not at liberty to terminate its agreement to acquire Pinnacle Foods at the time. The Tyson offer is contingent upon Hillshire backing away from its plans with Pinnacle Foods.
Smith further detailed plans regarding Tyson Foods' international business in a June 9 interview with CNBC.
Tyson’s efforts to expand in China had been put on hold because concerns over avian influenza have led to a slowed demand for chicken in China. Smith said the company still wants to pursue growth in China, but under current market conditions, the capital originally planned for expansion in China can be freed up to apply to paying down debts or to other aspects of the business such as the proposed Hillshire acquisition.
“We slowed down our China business a bit, and frankly we’re glad we’ve done that,” said Smith. “We haven’t come to any conclusion there yet. We’re still investigating our options and what the whole portfolio would look like. As we get through the next couple of months and get this deal structured, then we’ll have a better idea of how we want to project the (capital expenditures) and whether or not we will slow down any capital going to other parts of the business. We’ll look to optimize this big portfolio in a way that will create the most shareholder value,” Smith said.
Smith said he does not expect global demand for proteins such as poultry to decline. He estimated demand will grow about 2 percent per year, with most of that growth coming from outside of the United States.