The world's leading meat processor,
Tyson Foods Inc.
) subsidiary, Tyson Mexican Original Inc. has purchased Don Julio
Foods of Clearfield, Utah. The financial terms have not been
disclosed. The acquisition includes all brands marketed by Don
Julio, including equipment and related assets.
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Don Julio produces and sells flour and corn tortillas, and salty
snacks such as potato chips, tortilla chips and pretzels through
retailers across the U.S. under the brand names Don Julio
Authentic and Clover Club.
Tyson Mexican, earlier known as Mexican Original was bought by
Tyson in 1983 to diversify its product offerings. Prior to the
Don Julio acquisition, the company operated three dedicated
tortilla operations in Fayetteville, AR, Portland, IN and
Sanford, NC. Tyson Mexican Original tortillas and chips are sold
to foodservice and restaurant customers. About 1,300 team members
work for the company.
The team of fifty management personnel of Don Julio, will
however, continue to manage the operation as Tyson team members.
The acquisition will benefit Tyson Mexican by adding the two
popular brands of Don Julio and Clover Club. It will also boost
sales by the addition of Don Julio customers.
Moreover, the acquisition will put the Tyson Mexican Original's
products on grocery store shelves throughout the U.S., which till
now supplied products only to restaurants and foodservice
Tyson Foods' focus on Mexican food comes at a time when Mexican
food is becoming increasingly popular in the U.S., with more and
more Mexican-inspired cuisines being offered by fast-casual and
quick-service operators. Companies like Taco Bell, Chuy's
Holdings Inc. (
Yum! Brands Inc.
(YUM) offering Mexican delicacies delivered robust earnings in
Springdale, Arkansas-based Tyson Foods recently reported its
first quarter 2013 adjusted earnings of 48 cents per share, which
surpassed the Zacks Consensus Estimate of 39 cents by 23.1%.
Quarterly earnings also increased an impressive 14.3% year over
year backed by strong sales in chicken coupled with operational
Net sales went up marginally by 0.1% year over year to $8.4
billion in the quarter, but missed the Zacks Consensus Estimate
of $8.5 billion. Sales growth in the Chicken and Beef segment was
offset by declines in the other two segments − Pork and Prepared
Tyson believes that overall domestic protein (chicken, beef, pork
and turkey) production will decrease by 1% in fiscal 2013 from
2012 levels due to increased costs for cattle and hog producers
owing to the drought conditions of the summer of 2012 in the U.S.
For fiscal 2013, the company expects sales to increase to
approximately $35 billion, driven by anticipated price increases
as the domestic availability of protein goes down and raw
material costs increase.
The company projects capital expenditure of $550 million in
fiscal 2013. Tyson also expects interest expense of $140 million
for fiscal 2013.
Other Stocks to Consider
Tyson currently carries a Zacks Rank #1 (Strong Buy). Peer
Smithfield Foods Inc.
) carrying Zacks Rank #1 (Strong Buy) and
) carrying a Zacks Rank #2 (Buy) and are also worth