Tanmiah Food inks deal to sell stake in 2 subsidiaries to US Tyson for SAR 262.6 mln

Logo of Tanmiah Food Co.

Tanmiah Food Co. signed an agreement, on July 5, with US-based Tyson International Holding Co. to sell an equity stake in its wholly-owned subsidiaries, Agricultural Development Co. (ADC) and Supreme Foods Processing Co. (SFPC), for $70 million (SAR 262.6 million).

Tyson International is a wholly-owned subsidiary of NYSE-listed Tyson Foods Inc.

The deal entails selling 15% and 60% of Tanmiah’s stake in ADC and SFPC, respectively, the company said in a bourse filing today, July 6.

The transaction will likely close shortly, subject to the closing conditions, including the required merger control and regulatory approvals.

This transaction and the strategic partnership between the two companies are part of Tanmiah’s ongoing efforts to meet the growing global demand for protein products.

The company will maintain an 85% ownership in ADC and a 40% ownership in SFPC.

The company hired Ernst & Young Corporate Finance Ltd. as the financial advisor and Baker & McKenzie as the legal advisor for the transaction.

Upon completion of the transaction, the shareholders shall enter into shareholders’ agreements concerning the ownership, management and operations of SFPC and ADC.

Following completion, the shareholders agreed that Tyson will contribute an amount of $21 million (or any other amount approved upon by the shareholders) in consideration of newly issued shares in SFPC; and $14 million (or any other amount agreed upon by the shareholders) in return for newly issued shares in SFPC, to fund the expansion of additional processing capacity of SFPC. 

ADC is active in rearing and producing broilers, feed milling and operation of hatcheries, and producing, selling, and distributing fresh chicken. On the other hand, SFPC’s main activity is the production, distribution and sale of a variety of value-added pre-prepared chicken and beef products. 

ADC’s capital stands at SAR 20 million, while the registered capital of SFPC is SAR 8.63 million. 

This transaction provides a strategic partnership with Tyson to lay the basis for the next phase of Tanmiah’s growth by utilizing Tyson’s well-established track record and global industry expertise to drive innovation across the production, sale and distribution of fresh poultry and processed products in the domestic and international markets. 

The deal also aligns with Tanmiah’s strategic expansion plan, as it will double the company’s production capacity in further processed products. It will also enable Tanmiah to introduce new Halal products to the international market, enhancing its product portfolio diversification. 

In addition, the agreement will enable Tanmiah to enhance its operations through supply chain efficiency, larger scale of operations, and improved procurement procedures of grain and other commodities. 

The deal is expected to boost and strengthen the company’s brand across the GCC and other markets.

The transaction will be reflected on the consolidated financial statements of Tanmiah as of Sept. 30, 2022.

The sale proceeds are anticipated to fund capacity expansion and other corporate purposes in line with Tanmiah’s strategy.

Any further updates on the transaction will be disclosed in due.

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