Tyson Foods' Subsidiary Inks Deal To Expand In Kazakhstan

Tyson Foods, Inc. (NYSE:TSN) is committed toward expanding its presence in the global markets. The company’s beef and pork subsidiary — Tyson Fresh Meats, Inc — has reached an agreement with the Republic of Kazakhstan and a major beef producer Kusto Group for a project for development of a modern beef processing plant.

The proposed plant, with an expected harvest capacity of 2,000 head-per-day, will add an overseas beef plant for Tyson Foods. Further, industry experts believe that this development in Kazakhstan will open up ample export opportunities for Tyson Foods in China, Russia and the Middle East. Also, the company can leverage its well-established distribution networks in Central Europe.

Notably, Tyson Foods expects nearly 98% of total protein consumption in regions outside the United States, primarily in Asia. That said, this expansion is likely to enable the company to benefit from global opportunities related to rising protein demand.

Kazakhstan is resourcefully rich in water and land, which has been beneficial for its booming livestock and multi-protein export industry. To top it, the envisaged plant is expected to stimulate the country’s agricultural economy, providing a benefit of more than $1 billion to the country annually. This said, the investment is appropriate for Tyson Foods and Kazakhstan’s economy.

Tyson Foods’ Focus on Expansion Intact

Tyson Foods has been focusing on expansion through investments and buyouts, given the burgeoning demand for protein. Evidently, the company completed the acquisition of the European and Thai operations of BRF S.A. in June 2019. The buyout is likely to strengthen its footing in the Thai poultry space as well as expand presence in the U.K. and Netherlands.

On Nov 30, 2018, the company completed the acquisition of the Keystone Foods business, which supplies a variety of meat and chicken products internationally. The buyout has been bolstering the company’s Chicken and Other segments' performance. Other notable acquisitions of Tyson Foods in the past include AdvancePierre, Original Philly Holdings, Hillshire and the Mexican food restaurant chain — Don Julio Foods. Moreover, the company acquired poultry rendering and blending assets of AMPRO Products, Inc and American Proteins, Inc. The deal has enabled Tyson Foods to bolster animal products recycling capabilities, which will expand the animal feed business.

In fact, Tyson Foods’ constant efforts to drive growth have helped this Zacks Rank #3 (Hold) stock rally as much as 67.9% this year compared with the industry’s growth of 38.8%.

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