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Tyson Foods is a Buy

January 28, 2015 | About:

Tyson Foods (NYSE:TSN) is one of the world's largest producers of chicken, beef, pork and prepared foods. Its leading brands are Tyson, Jimmy Dean, Hillshire Farm, Sara Lee frozen bakery, Ball Park, Wright, Aidells, and State Fair. The company operates an integrated poultry production process which consists of breeding stock, contract growers, feed production, processing, further-processing, marketing and transportation of chicken and related allied products, including animal and pet food ingredients. Tyson operates in five segments: Chicken, Beef, Pork, Prepared Foods, and International. The company provides products and services to customers throughout the United States and approximately 130 countries.

Story So Far

To strengthen its position, Tyson has completed its merger with Hillshire Brands Co. (HSH), a leader in branded, convenient foods on Aug. 28, 2014. Hillshire Brands' portfolio includes iconic brands such as Jimmy Dean, Ball Park, Hillshire Farm, State Fair, Sara Lee frozen bakery and Chef Pierre pies, as well as artisanal brands Aidells, Gallo Salame, Van's Natural Foods and Golden Island premium jerky. This merger will help Tyson to leverage its iconic brands and also to strengthen its position in the prepared foods segment. This merger has also helped Tyson to accelerate its sales in the prepared foods segment in the fourth quarter. It is expected that the merger of these two companies will generate synergy savings of $225 million in fiscal 2015 and more than $500 million by fiscal 2017.

Current Steps Taken

It is making major improvements to its Vienna, Georgia poultry plant as part of an ongoing plan to maximize efficiencies and meet growing demand for its products. The capital improvement project, valued at more than $110 million, will bolster the future of the operation and create more than 500 jobs in Vienna.

"Tyson Foods' decision to expand in Georgia underscores how our No. 1 business climate and highly skilled workforce keeps leading companies competitive in today's fast-paced market," said Georgia Governor Nathan Deal. "Tyson Foods is one of our state's largest employers in food processing, and I'm confident that it will continue to benefit from our top talent and robust industry network in order to deliver high-quality jobs to Georgia's citizens."

The Vienna plant has been producing chicken for foodservice customers, including restaurant chains, but will convert to supply fresh tray pack chicken to meet the needs of regional retail customers. Work began at the location in mid-January and is scheduled to be completed in mid-2015.

New Launch

TSN will introduce two Aidells chicken sausage flavors in January 2015. There is a constant shift in the consumer preferences, which is shifting from beef to chicken due to escalated prices.

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