Meat industry giant Tyson Foods is in talks to acquire family-owned California-based Foster Farms in around $2 billion deal, CNBC reported, citing people familiar with the situation.
However, both sides appear to disagree over the price and the talks may fall apart, according to the people, if a deal is completed, it is still at least many weeks away.
Following the news of the talks, Tyson’s shares fell around 2 percent, but quickly recovered to $61.64 a share, off less than 1 percent.
Tyson is one of the biggest American food companies by sales that supplies meat to restaurants and other food-service customers, and also sells branded meat under labels including Golden Island Jerky, Hillshire Farm, and Jimmy Dean.
The deal talks came few months after the meat processor closed an acquisition of Keystone Foods, McDonald’s meat supplier in a $2.16 billion deal.
Now, acquisition of Foster Farms which produced branded frozen foods, chicken, and turkey will possibly trigger a mild change in course for Tyson Foods. Instead, it will reflect a strategy the company approached five years ago, with its acquisition of Hillshire Brands in a $7.7 billion deal including the purchase of Ball Park hot dogs and Jimmy Dean sausages.
When asked about the company’s global M&A strategy, Tyson CEO Noel White said that it is expecting around 90% of growth in global demand of protein to take place outside the US. Tyson plans to be part of that demand growth and the priority to expand the business in value-added products, prepared foods as well as in the international market, he added.
As reported in CNBC, White succeeded as CEO in September last year, after serving as Tyson’s group president of pork, beef, and international.
Foster Farms, founded in 1939 by Max and Verda Foster, has been under family ownership with workforce of nearly 12,000 people operating at its chicken plants and in turkey production. In addition to farms in Louisiana and California, Foster Farms works with 30 family-owned farms in Washington and Oregon.
On the deal talks, Foster Farms wrote in an emailed statement that as a policy, it has never commented on any speculated M&A activity. While rumors and inquiries have come and gone for years, the company has grown as a family-owned company for nearly 80 years.
Tyson spokesman Worth Sparkman also said that the company does not comment on rumors.