Processing Magazine

Tyson meat company seeks global growth

November 5, 2008

Investors are waiting for Don Tyson''s second act. According to the Associated Press, Tyson plans to duplicate his company''s domination of the U.S. livestock industry, but on a global scale. If the strategy succeeds, it could do far more than deliver profits to the company and its shareholders. As Tyson Foods Inc. replicates its uniquely American model of corporate meat production throughout the developing world, the company could fundamentally transform rural economies in nations like India, Brazil and China. The company''s stock price skyrocketed during the 1970s and ''80s but has lagged for nearly a decade. Chronic overproduction of chicken, export bans on U.S. beef because of mad cow disease and increasingly high grain prices have sapped the company''s profit potential at home. Tyson serves an unusual role at the company. On paper, he is simply the former chairman, a member of the board and a senior "consultant" to management. But he has outsized influence over operations because he owns the majority of a special class of stock that gives him roughly 70 percent of all shareholder voting power. That means he can veto or approve any company strategy or shareholder proposal. Tyson himself is helping bankroll the company''s expansion as big creditors have tightened their lending. As Tyson builds its own slaughterhouses, feed mills and network of contract farmers, it will follow the expanding footprint of fast food chains moving into countries like Brazil and India. Tyson''s strategy swung into high gear this fall. In September, Tyson bought two Brazilian poultry companies and acquired majority ownership in a third. The company didn''t disclose terms of the deal to buy Macedo Agroindustrial and Avicola Itaiopolis. It acquired a 70 percent ownership of Frangobras. Tyson announced three joint ventures in China this year, including last month''s purchase of a 60 percent share of Shandong Xinchang Group''s poultry operations. It also purchased the majority interest in chicken processing plants in Zhucheng and Shandong, and majority interest in a poultry operation being developed in Haimen City near Shanghai. In India, Tyson bought a 51 percent ownership of Godrej Foods, Ltd., based in Mumbai. The joint venture will be called Godrej Tyson Foods and is expected to have annual sales of about $50 million. One thing that seems clear is that Don Tyson will be pushing the company''s growth for years to come.