Food giant Tyson Foods intends to buy AdvancePierre, a company that includes the former Barber Foods of Portland, for $4.2 billion.

The sale’s likely impact on the Portland operation is unknown. Tyson said it intends to push AdvancePierre brands such as Barber Foods into new markets, but it also plans to cut costs and make the operation more efficient.

The deal, announced Tuesday morning, has been approved by the boards of both Tyson and AdvancePierre. If it receives regulatory approval, the sale is expected to close in the third quarter of this year.

Cincinnati-based AdvancePierre employs about 300 people at its St. John Street plant where frozen, stuffed chicken entrees are made and sold under the Barber Foods name. AdvancePierre bought Barber Foods in June 2011 and started layoffs as it integrated the Portland operation into the much larger company. At the time of the sale, about 650 people worked there.

AdvancePierre also invested millions in modernizing the production facility, helping the frozen entree division become one of the most profitable for the company, which also makes sandwiches and other prepared foods for convenience stores and other retailers, as well as institutions such as schools and hospitals.

Since 2011, AdvancePierre has undergone multiple acquisitions, and an initial public offering last July raised $219 million.

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In a written statement, Tyson said the Barber Foods brand of products “has a strong heritage in both retail and food service channels and we look forward to building upon its foundation of quality.”

Several workers at the Portland facility declined to speak with the Press Herald, saying they have been instructed not to speak to the press and to refer all media inquiries to a communications firm in Cincinnati. The firm did not respond to questions about the acquisition’s likely impact on operations in Portland.

PLANS FOR GROWTH, EFFICIENCIES

During a conference call for investors Tuesday morning, Tyson President and CEO Tom Hayes talked in broad terms about how he plans to combine the two companies. Some of his comments could be interpreted as good news for employees of the former Barber Foods, while others could be regarded as cause for concern.

On the positive side, Hayes said one of the company’s goals is to expand the reach of AdvancePierre’s products. He described the company as a regional player and said Tyson wants to take it national.

“This transaction is about growth,” Hayes said. “We believe that Tyson is the right home for AdvancePierre to continue to expand its distribution footprint and nurture even greater brand loyalty for its products.”

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Hayes noted that there isn’t much overlap between Tyson and AdvancePierre products, and that all of the product segments in which AdvancePierre competes are attractive to Tyson. He said employees of AdvancePierre will benefit from the acquisition.

“We are looking forward to AdvancePierre employees joining our team,” Hayes said. “As a part of Tyson, they will have a larger, more attractive opportunity set at a company that Fortune repeatedly lists as one of the best places to work.”

But Hayes also said Tyson expects to transform the combined entity into a leaner, more efficient operation by streamlining areas such as manufacturing, ingredient sourcing, product distribution and corporate administration.

“We should expect synergies of approximately $200 million to be realized within three years,” he said.

When asked for specifics about where the cost-cutting would occur, Hayes said, “It’s a bit too early to give you the full quantification. We’re working through that.”

BIG FISH TYSON SWALLOWS LITTLE FISH

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Tyson is a massive conglomerate with operations in the United States, India and China. In 2016 it sold products in roughly 115 countries, according to its annual report. The company employed about 114,000 workers in 2016 and generated sales revenue of $36.88 billion.

Brands under the Tyson umbrella include Hillshire Farm, Jimmy Dean, Wright Brand bacon, Aidells gourmet sausage and Ball Park hot dogs. Its largest retail distributor is Wal-Mart Stores Inc., which accounts for more than 25 percent of all Tyson product sales. The company also is the primary supplier of chicken to fast-food chains such as KFC, McDonald’s, Burger King, Wendy’s and Taco Bell.

AdvancePierre is a much smaller operation, with roughly 4,500 employees and $1.57 billion in sales in 2016, according to its annual report.

The 250,000-square-foot plant in Portland is the largest of AdvancePierre’s 11 manufacturing operations. It falls under the company’s “entrees and snacks” segment, which accounted for roughly one-third of AdvancePierre’s total sales over the past three years.

In 2014, Tyson purchased Hillshire Brands Co. for $7.7 billion in what was described as the meat industry’s largest acquisition ever. To help fund the deal, Tyson agreed to sell off its poultry operations in Mexico and Brazil to Brazilian meat processing giant JBS S.A. for $575 million.

No major layoffs have been reported as a direct result of the Hillshire Brands acquisition, but Tyson did shut down two manufacturing facilities in 2016 that it said were unrelated to Hillshire. They included a pepperoni plant in Jefferson, Wisconsin, and a plant in Chicago that made prepared meals for the hospitality industry. A total of 880 workers were laid off.

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Tyson has had a few run-ins with regulators, pro-labor organizations and animal rights groups in recent years over some of its business practices.

In 2016, the Occupational Safety and Health Administration fined Tyson $263,000 for unsafe working conditions in a Texas chicken-processing plant after a worker’s finger was accidentally amputated in a piece of machinery. OSHA found more than a dozen violations, including a lack of proper safety gear for workers and protective guards for potentially dangerous machines.

Also in 2016, Tyson was accused of engaging in animal cruelty after the animal rights group Compassion Over Killing released an undercover video of workers in several Tyson contract chicken farms punching, kicking, suffocating, mutilating and crushing live birds. Tyson vowed to put a stop to such practices, and 10 employees were fired.

JOBS FOR THE IMMIGRANT COMMUNITY

Barber Foods was founded in 1955 as Barber Beef by Augustus “Gus” Barber. It initially sold hamburger to Portland restaurants and markets. The company later expanded into chicken sales, and in 1968 its name was changed to Barber Foods.

The Barber Foods brand consists primarily of prepared chicken entrees sold to supermarkets and other food retailers, as well as institutions such as hospitals, schools, hotels and the U.S. military.

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Over the years, Barber Foods earned recognition as a major employer for the immigrant community in Greater Portland, hosting language and citizenship programs for immigrants and refugees. It also received honors for its contributions to local food banks.

Bruce Wagner served as Barber Foods’ interim president from 2007 to 2011. He said Barber, who was of Armenian descent, built a staff so diverse that at one point there were more than 50 different languages being spoken on the factory floor.

“He had a vision that Barber Foods could be a great place for newly arrived Americans to prosper and move on (from),” said Wagner, who is now CEO of the Finance Authority of Maine. “It was really a multicultural, very dynamic environment.”

Wagner praised AdvancePierre for having the foresight to modernize and automate the Portland plant, even though it resulted in staff reductions. He said the Portland facility is far more likely to survive under Tyson as a result of those actions.

“I would at least express optimism that it wouldn’t be consolidated,” Wagner said.

J. Craig Anderson can be contacted at 791-6390 or at:

canderson@pressherald.com

Twitter: jcraiganderson


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