business

Cargill and Tyson Are Interested in McDonald’s Chicken Nugget Supplier

Updated on
  • Marfrig-owned Keystone supplies chicken nuggets to McDonald’s
  • Fosun International also said to be interested in the unit

McDonald's Corp. chicken nuggets.

Photographer: Daniel Acker/Bloomberg

Tyson Foods Inc., Cargill Inc. and Fosun International Ltd. have expressed interest in the potential acquisition of Keystone Foods LLC, the U.S. supplier of chicken nuggets to McDonald’s Corp., according to people with direct knowledge of the matter.

Marfrig Global Foods SA, Brazil’s second-largest beef producer, plans to sell Keystone and raise more than $3 billion, said the people, who asked not to be named because the discussions are private. An agreement on the transaction may be reached in the next few weeks, one of the people said.

Marfrig jumped as much 9.1 percent in early trading and had the biggest advance among companies in Brazil’s benchmark Ibovespa index. The shares were up 5.6 percent at 8.09 reais as of 10:28 a.m. in Sao Paulo.

Marfrig, which bought Keystone for $1.26 billion in 2010, declined to comment on the sale talks. Tyson doesn’t comment on rumors, company spokesman Gary Mickelson said. Cargill didn’t immediately have a comment. Diogo Castro e Silva, a Fosun managing director in Brazil, declined to comment about the sale.

Keystone has operations not only in the U.S. but in South Korea, China, Malaysia, Thailand and Australia. Its Brazilian owner said last month it will use some of the proceeds from the sale to pay for the $969 million acquisition of a controlling stake in National Beef Packing Co., the fourth-largest American beef-packing company. The rest of the cash will be used to pay down debt, which should slash the Brazilian meatpacker’s leverage.

A $3 billion transaction would value Keystone at about 11 times last year’s earnings before interest, taxes, depreciation and amortization.

— With assistance by Megan Durisin, and Mario Parker

(Updates with share price in third paragraph.)
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