Tyson Foods buys strategic stake in Saudi agribusiness operations
Expansion into international markets is a key part of the US company’s strategic growth plan, with much of the demand for global protein consumption forecast to occur outside of the US.
Tanmiah, part of the Al-Dabbagh Holding Group, is a significant supplier of fresh poultry, processed poultry, other processed meat products and feed in the Middle East. It operates 93 farms as well as six hatcheries, two feed mills, four slaughterhouses, three food processing plants, and 13 dry and cold storage facilities located in Saudi Arabia, Bahrain and the UAE.
As part of the deal, Tyson is investing in Tanmiah’s poultry subsidiaries, namely taking a 15% equity stake in Agriculture Development Company (ADC), and a 60% equity stake in Supreme Foods Processing Company.
The transaction is subject to approval by regulators.
ADC is a fully integrated poultry company producing broiler chickens and running hatcheries and feed mills. It sells fresh poultry under the Tanmiah brand to retailers and food service customers. Supreme Foods produces a variety of value-added and cooked chicken and beef products with a distribution network spread across the Middle East.
“The strategic partnership is expected to accelerate Tyson Foods’ and Tanmiah’s growth and generate significant value in the short and long term,” said Tan Sun, president of Tyson Foods, APAC. “This will be primarily achieved through further expansion across the value chain, and enhanced product, customer, and geographical diversification, as well as improvement of production and other operational processes. The agreement will also see Tyson Foods and Tanmiah unlock long-term opportunities in the growing Halal food market.”
As part of the agreement, Tyson and Tanmiah are to invest to expand the processing capacities of Supreme Foods.
Supply chain efficiencies
Ahmed Bin Sharaf Osilan, executive board member and MD of Tanmiah, said the alliance would potentially realize substantial synergies across all stages of the supply chain from sourcing of materials to production and final distribution, in addition to supply chain efficiencies and improved margins.
Total Tyson Foods sales from international business and exports represented 14% of total company sales in fiscal year 2021. This included US$4.8bn in US export sales and US$2bn in foreign country revenues.