020419 Tyson Shopping Some Specialty Food Lines

Chicago - Tyson Foods Inc. has lost its appetite for some of the specialty foods it picked up in its $3.2 billion purchase of giant meatpacker IBP and is shopping those brands to prospective buyers, industry sources said.

The business for sale -- Specialty Brands Inc., based in Ontario, California -- sells frozen food products to food-service industry customers such as hotels and restaurants, the sources said.

The assets may be worth $100 million to $200 million, with annual revenues of roughly $300 million, but they have not been strong profit drivers for IBP, the sources said.

Little Rock, Arkansas-based investment banking firm Stephens Inc. is handling the transaction for Springdale, Arkansas-based Tyson, which picked up the assets as part of its acquisition of IBP in late September.

One industry source said that initial bids for the business were due at the end of next week.

Representatives for Tyson and Stephens declined to comment.

Included in the sale are such diverse brands as Butcher Boy meats, Jose Ole and Posada Mexican foods, Rotanelli frozen filled pastas and Fred's appetizers, such as frozen meatballs and snacks.

"They've (Tyson) had over six months to look at the business and I think they're picking and choosing what they want," said Prudential Securities food analyst John McMillin. "They appear to be divesting more than I would have anticipated."

He noted that Tyson had hoped to be able to integrate the specialty brands into its own food-service line.

Geographically, the Specialty Brands units are spread out and include locations on the East and West Coasts and in Texas, one industry source said. The business has come up for sale in recent weeks.

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