Tyson's Potential Keystone Deal May Face Scrutiny, Mizuho Says

(Bloomberg) -- Tyson Foods Inc.’s potential purchase of U.S. chicken-nugget maker Keystone Foods LLC may spur "significant competitive concerns” over consolidation in the poultry industry, Mizuho Securities USA analyst Jeremy Scott said in a note.

Tyson is in exclusive talks to buy Keystone, a U.S. supplier of chicken nuggets to McDonald’s Corp., from Marfrig Global Foods SA, people familiar with the matter told Bloomberg on July 27. Springdale, Arkansas-based Tyson is one of four big companies that together already control more that half of U.S. chicken output.

It’s also uncertain whether Tyson would be interested in Keystone’s international units, Scott said in the note late last week. Keystone operates in six countries in North America, Asia-Pacific, Middle East and Africa, according to its website.

Other companies including Cargill Inc. and China’s Cofco Ltd. had previously expressed an interest in Keystone. Brazil’s Marfrig said in April that it would sell Keystone to fund its purchase of a stake in U.S. meatpacker National Beef.

Representatives from Tyson and Marfrig declined to comment on the Mizuho report.

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