Tyson Foods has sealed plans to buy a majority stake in Chinese poultry producer Shandong Xinchang Group.

The US meat giant, which had signed a preliminary deal to buy a 60% stake in the business, said yesterday (10 September) that it had finalised the agreement, which will see the firms set up a joint venture.

The deal has yet to receive government approval but the two sides plan to set up Shandong Tyson Xinchang Foods Co., a business consisting of the Chinese group's existing assets.

The two companies also plan to buy another chicken processing site in Shandong province, which would take the venture's assets to four chicken processing sites and a duck processing plant.

"Poultry is the second-leading meat protein source in China behind pork and continues to make significant gains in consumption," said Rick Greubel, group vice president and international president for Tyson Foods. "This joint venture will enable us to help meet China's appetite for poultry, which has been growing faster than the existing domestic supply."

Most of the chicken and duck products are sold through the foodservice and wholesale channels and Greubel added that the venture would look to expand its business in these sectors, as well as with major Chinese retail customers.

The venture will be Tyson's third in China, a market that accounted for 9% of the group's overseas revenue in fiscal 2007.