ADVERTISEMENT

Cargill, Tyson Are Said to Be Interested in Keystone Foods

Two firms showed interest in potential acquisition of Keystone Foods, U.S. supplier of chicken nugget to McDonald’s.

Cargill, Tyson Are Said to Be Interested in Keystone Foods
McDonald’s Corp. chicken nuggets. (Photographer: Daniel Acker/Bloomberg)

(Bloomberg) -- Tyson Foods Inc. and Cargill Inc. have expressed interest in the potential acquisition of Keystone Foods LLC, the U.S. supplier of chicken nuggets to McDonald’s Corp., according to people with direct knowledge of the matter.

Marfrig Global Foods SA, Brazil’s second-largest beef producer, plans to sell Keystone and raise more than $3 billion, said the people, who asked not to be named because the discussions are private. An agreement on the transaction may be reached in the next few weeks, one of the people said.

Marfrig, which bought Keystone for $1.26 billion in 2010, declined to comment on the sale talks. Tyson doesn’t comment on rumors, company spokesman Gary Mickelson said. Cargill didn’t immediately have a comment about the sale.

Keystone has operations not only in the U.S. but in South Korea, China, Malaysia, Thailand and Australia. Its Brazilian owner said last month it will use some of the proceeds from the sale to pay for the $969 million acquisition of a controlling stake in National Beef Packing Co., the fourth-largest American beef-packing company. The rest of the cash will be used to pay down debt, which should slash the Brazilian meatpacker’s leverage.

A $3 billion transaction would value Keystone at about 11 times last year’s earnings before interest, taxes, depreciation and amortization.

--With assistance from Megan Durisin and Mario Parker

To contact the reporters on this story: Gerson Freitas Jr. in São Paulo at gfreitasjr@bloomberg.net, Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net, Shruti Date Singh in Chicago at ssingh28@bloomberg.net.

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Patrick McKiernan

©2018 Bloomberg L.P.