Blog Coverage Tyson Foods Acquires AdvancePierre; Explores Multiple Growth Opportunities

LONDON, UK / ACCESSWIRE / April 26, 2017 / Active Wall St. blog coverage looks at the headline from Tyson Foods, Inc. (NYSE: TSN) and AdvancePierre Foods Holdings, Inc. (NYSE: APFH). Tyson Foods announced on April 25, 2017, an agreement with AdvancePierre Foods Holdings pursuant to which a subsidiary of Tyson will launch a tender offer to acquire all the outstanding shares of AdvancePierre for $40.25 per share in cash. This transaction offers Tyson a unique opportunity to create greater value and scale by joining highly complementary market-leading portfolios. Register with us now for your free membership and blog access at:

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Breaking down the Transaction

The total enterprise value of the transaction is about $4.2 billion and includes $3.2 billion in equity value and $1.1 billion in the assumption of AdvancePierre debt. The offer price of $40.25 per share represents a 31.8% premium to AdvancePierre’s closing price on April 05, 2017, the most recent unaffected trading day, and a 41.6% premium to the Company’s 60-day volume-weighted average trading price ending on April 05, 2017.

The transaction is set to provide and attractive current premium to AdvancePierre’s shareholders as well as significant ongoing benefits to Tyson’s shareholders, customers and team members of both the Companies. AdvancePierre views this transaction as a platform to stage growth and broaden its distribution network by leveraging Tyson’s existing distribution infrastructure and go-to-market capabilities.

Tyson is a major player in the segment with operations in the United States, India, and China. In 2016, the Company sold products in about 115 countries and employed about 114,000 workers and generated net sales revenue of $36.86 billion.

AdvancePierre: Outlook

The Cincinnati-based AdvancePierre currently employs about 300 people at its St. John Street plant where frozen, stuffed chicken entrees are made and sold under the Barber Foods name. AdvancePierre bought the flagship, Barber Foods in June 2011, and executed layoffs to integrate the Portland operation into a much larger conglomerate. Tyson plans to push AdvancePierre’s brands, such as Barber Foods, into new geographical segments and plans to cut costs while making the operation more efficient.

AdvancePierre has been driving growth and innovation collectively to modernize its production facility to help the frozen entree division become one of the most profitable for the Company which also makes sandwiches and other prepared foods for convenience stores and other retailers, including multiple institutions. Since 2011, the Company has made multiple acquisitions, wherein an initial public offering in July 2016, it raised around $219 million.

Strategic Benefits from the Transaction

This transaction is viewed as a merger of two highly complementary portfolios and will further strengthen Tyson’s strategic intent to sustainably feed the world with its rapidly growing portfolio of protein-packed foods. This acquisition will expand Tyson’s core strength into the fast-growing convenience and retail perimeter with solutions that span all-day parts.

Tyson expects the transaction to result in cost synergies of about $200 million, to be fully realized by FY20. Cost synergies will be created by a consolidated manufacturing footprint, procurement efficiencies, distribution network consolidation, and addressing redundant sales and marketing functions and duplicative corporate overhead. The Company additionally views multiple opportunities to utilize high-quality raw materials from the fresh meats division to drive growth and efficiency. The acquisition is expected to be immediately accretive to Tyson’s EPS on both a GAAP and cash basis, excluding one-time costs.

Company Growth Prospects

Tyson has been exploring alternative growth strategic lately, where the primary one is a shift from non-protein businesses to protein-packed brands. This acquisition is viewed as a step to explore new opportunities in the segment. On April 24, 2017, the Company announced the sale of three non-protein businesses. In February 2017, Tyson Foods announced its strategy to sustainably feed the world with the fastest growing portfolio of protein packed brands. This acquisition and the Barber Foods flagship will help the Company scale into new markets and generate greater value for the shareholders.

Stock Performance

At the closing bell, on Tuesday, April 25, 2017, Tyson Foods’ stock slightly fell 0.40%, ending the trading session at $65.13. A total volume of 4.96 million shares were traded at the end of the day, which was higher than the 3-month average volume of 2.82 million shares. In the last month and previous three months, shares of the Company have advanced 4.09% and 4.82%, respectively. Moreover, the stock gained 5.97% since the start of the year. The stock is trading at a PE ratio of 13.03 and has a dividend yield of 1.38%. At Tuesday’s closing price, the stock’s net capitalization stands at $23.10 billion.

On Tuesday, April 25, 2017, the stock closed the trading session at $40.48, surging 10.39% from its previous closing price of $36.67. A total volume of 33.81 million shares have exchanged hands, which was higher than the 3-month average volume of 599.58 thousand shares. AdvancePierre Foods’ stock price advanced 31.69% in the last month, 48.42% in the past three months, and 46.65% in the previous six months. Moreover, the stock gained 36.71% since the start of the year. The Company’s shares are trading at a PE ratio of 20.93 and have a dividend yield of 1.58%. The stock currently has a market cap of $3.15 billion.

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