Tyson Foods Inc. is close to acquiring West Chester-based Keystone Foods LLC, a U.S. supplier of chicken nuggets to McDonald's Corp., according to two people familiar with the matter.
Tyson is in exclusive talks with Keystone's owner, Brazil's Marfrig Global Foods SA, said the people, who asked not to be named because the discussions are private. Representatives of Marfrig and Springdale, Ark.-based Tyson declined to comment on the talks.
Marfrig is seeking to raise more than $3 billion from the sale of the business, people with knowledge of the matter said in May. Marfrig said that month that it had selected five bidders for the final phase of the sale process, which included visits to Keystone factories in the U.S. and Asia and the submission of binding offers in June.
Keystone had revenue of $2.8 billion last year and has operations in seven U.S. states as well as in South Korea, China, Malaysia, Thailand, and Australia. While its American assets account for almost 70 percent of sales, the food-service company has experienced stronger growth from its Asian arm.
Marfrig said in April it would use some of the proceeds from the Keystone sale to pay for its $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.
Besides Tyson, Keystone has attracted bids from Cargill Inc., China's Cofco Ltd., and an unidentified Japanese firm, two people with direct knowledge of the matter said in June. George's Inc. — a family-owned chicken producer based in Springdale, Ark. — also presented a binding offer.
Marfrig, controlled by Marcos Molina dos Santos, considered selling Keystone's U.S. and Asian operations separately, a person said in May. Marfrig hired JPMorgan Chase & Co. to find a single buyer and would still prefer that outcome, the person said at the time.