Dive Brief:
- Tyson Foods has agreed to acquire Williams Sausage Company, a sausage and bacon processor based in Union City, Tennessee, it said. No terms of the deal were disclosed, and it awaits regulatory approval.
- Williams employs approximately 500 employees and sells fresh and fully cooked sausage, bacon and sandwiches.
- The purchase comes as M&A activity in the meat space has cooled considerably, and could allow Tyson to gain new revenue streams.
Dive Insight:
Tyson’s latest acquisition comes during a period of supply and demand volatility for the company.
In its last quarter, the company missed earnings expectations — a 70% year-over-year decline in earnings per share — as beef and pork sales fell, which CEO Donnie King blamed on an overabundance of the protein available in the market. Buying Williams could allow it to grow its presence in the sausage and bacon segments.
In a statement, group president of Tyson’s prepared foods business unit Stewart Glendinning said the company sees the Williams purchase aligning with its goal to expand its manufacturing capacity. And the company sees M&A as an opportunity to gain back the customers it lost in the last quarter as it broadens its reach, the meat giant’s CFO John R. Tyson said in its last quarterly earnings call.
“We have an opportunity to innovate, expand and acquire into new spaces through new offerings, the growth of our existing products, and attractive, disciplined approach to M&A,” Tyson said.
Tyson is not unfamiliar with the two meat product areas Williams Sausage Company focuses on. It owns Aidells, which sells pork and chicken-based sausage products. And bacon is an area Tyson sees particular promise in, as it invested $355 million in a bacon plant in Kentucky last year, which produces products for its Wright and Jimmy Dean brands.
Tyson’s most recent acquisition was Supreme Foods Processing, a Saudi cooked meats maker, in July 2022, according to Crunchbase.
The slower climate of acquisitions in the meat and poultry space follows the rest of the food industry, which has experienced a decline in M&A activity since the beginning of 2022 amid an uncertain economic environment. Supply chain woes, interest rate hikes, global tensions and record-breaking inflation all contributed to CPGs investing less in new companies according to a Kroll report published last July.
