Tyson Foods Inc said on Monday it would sell its Mexican and Brazilian poultry businesses to JBS SA’s Pilgrim’s Pride for $575 million and use the proceeds to pay down debt from its pending $7.7 billion purchase of Hillshire Brands Co. Tyson’s purchase of Hillshire is expected to close before September 27.
Tyson in June outbid Pilgrim’s Pride with a $63 per share offer for Hillshire, the maker of Jimmy Dean sausages and Ball Park hot dogs, in what would be the biggest deal yet for the global meat business.
Tyson has been laying out plans to quickly pay off debt from the planned Hillshire purchase after some critics said its offer price was too high. Pilgrim’s Pride declined to raise its bid from $55, saying that paying more was not in the best interest of shareholders.
The Mexico and Brazil poultry operations being sold were good businesses for Tyson but lacked “the necessary scale to gain leading share positions,” Chief Executive Donnie Smith said on a conference call with analysts.
Tyson also said it was shuttering three of its U.S. factories that make processed meat products such as sausages and hot dogs. The closures were due to changing product needs, an aging Cherokee, Iowa factory and the distance of the Buffalo, New York and Santa Teresa, New Mexico plants from their raw material supply base, the company said last week.
