Source: Chris Scott, MEATINGPLACE, 4/27/17


Two industry analysts are generally applauding the $4.2 billion acquisition of AdvancePierre Foods Holdings by Tyson Foods, although one slightly lowered her earnings estimates for Tyson in fiscal 2017.

Kenneth Zaslow at BMO Capital Markets sees the purchase as “strategically and financially sound,” noting that AdvancePierre will contribute to Tyson’s long-term growth. He notes that AdvancePierre’s customer-centric business model should continue to generate above-industry volume growth, especially in foodservice and alternative channels. Zaslow adds that the deal’s synergies could surpass the $200 million Tyson expects to see over the next three years because of the revenues generated in the two years after the deal closes this fall.

Meanwhile, Farha Aslam at Stephens Inc. believes the AdvancePierre purchase likely will accelerate Tyson’s efforts to boost its Prepared Foods segment in terms of growth and earnings recovery. She adds that protein margins have improved and prospects for China resuming imports of U.S. beef definitely could benefit Tyson in the long run.

However, Aslam is lowering her earnings estimate for fiscal 2017 to $4.97 a share from $5, mostly because of the timing of the transaction. She also raised Tyson’s fiscal 2018 earnings estimate to $5.55 a share from $5.40 in the wake of the acquisition.

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