As part of efforts to meet growing global demand for protein, US-based Tyson Foods, Inc. (NYSE: TSN) and Saudi-based Tanmiah Food Company (“Tanmiah” or the “Company”, 2281 on the Saudi Exchange) have entered into a strategic partnership.
Tyson Foods is one of the world’s leading food companies and a recognized leader in protein while Tanmiah is a provider of fresh and value-added poultry and other meat products, animal feed and health products and a foods brand franchise operator.
Through the agreement, Tyson Foods will acquire a 15% equity stake in Tanmiah subsidiary Agriculture Development Company (ADC) and a 60% equity stake in Supreme Foods Processing Company. The transaction is still subject to approval by KSA regulators.
ADC is a fully integrated poultry company that produces broiler chickens and operates 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, including Saudi Arabia, Kuwait, Bahrain, UAE, Oman, Lebanon, and Jordan among others.
“This investment will enable us to access poultry supplies in Saudi Arabia to meet the growing demand for protein in the Middle East and other markets,” said Chris Langholz, president of International for Tyson Foods. “Expansion into international markets is a key part of our strategic growth plan and we’re pleased to better serve customers in this region.”
“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 Foods and Tanmiah have committed to invest to expand the processing capacities of Supreme Foods. This investment is aligned with Tanmiah’s strategic expansion agenda and will result in doubling the company’s production capacity in further processed products. It will also enable Tanmiah to introduce new complementary products to the market, enhancing the diversification of the product portfolio.
“We are delighted to be joining hands with a well-renowned global leader in food production to accelerate our growth and development agenda,” said Zulfiqar Hamadani, CEO of Tanmiah. “Our strategic partnership marks a significant milestone in Tanmiah’s journey and demonstrates our commitment to growth and supporting Saudi Arabia’s food security objectives. We are ready to embark on this new phase with Tyson Foods, whose commitment to animal welfare, food safety, sustainability, and efficiency, are very much in line with our own business model and sustainability framework. This transaction will not only reinforce our positioning in the domestic market but will also enable us to expand our global footprint through leveraging Tyson Foods’ long-standing relationships with customers worldwide.”
“In line with our ambitious growth plans and ongoing endeavors to deliver significant long-term value to shareholders and customers alike, we proudly announce Tanmiah’s partnership with Tyson Foods,” said Ahmed Bin Sharaf Osilan, Executive Board Member & Managing Director of Tanmiah. “We are excited about the substantial synergies that we expect this transaction will enable us to realize 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. Alongside the significant opportunities that will be unlocked for the company in the future, we remain dedicated to our pioneering role in supporting Saudi Arabia’s food security and self-sufficiency goals. We are also looking forward to further advancing our technical expertise by collaborating with Tyson Foods to extend innovative and diversified product offerings to a broader base of customers in the Kingdom and abroad.”
The financial impact of the transaction is expected to be reflected in Tanmiah’s third quarter financial statements and is subject to final payment of costs associated with the transaction.
The investment in Tanmiah aligns with Tyson Foods’ strategy of expanding value-added capacity in its international business. The company expects to open seven new fully cooked plants outside the U.S. over the next two years, with six in Asia and one in Europe. Global protein consumption is forecasted to rise by close to 95 billion pounds over the next 10 years, with much of that demand happening outside the U.S.
Total Tyson Foods sales from international business and exports represented 14% of total company sales in fiscal year 2021. This included $4.8 billion in U.S. export sales and $2.0 billion in foreign country revenues.