Poultry giant Tyson Foods continues to negotiate with the Securities Exchange Commission over its proposed buyout of IBP. Tyson had extended its public offer of $30 per IBP share until Feb. 7, but continued questioning from the SEC led to an extension of the deadline.
Tyson Chairman John Tyson spoke to trade media on Feb. 3 during the National Cattlemen’s Beef Association’s annual convention in San Antonio, Texas. Mr. Tyson, along with several Tyson and IBP executives addressed several concerns beef producers have voiced over the buyout.
Following are some of the major points covered during the news conference:
- Mr. Tyson’s opening statement addressed misunderstanding of a comment he made some weeks back to the effect of “We’re going to do for beef what we’ve done for chickens.” Some in the industry took that to mean vertical integration. He emphasized that he was referring to product development, branding and marketing.
- Tyson plans to accelerate IBP’s branded-beef program. They are bullish on the “Thomas E. Wilson” line of products and said that IBP’s progress in branded-beef development and marketing was a key factor in their decision to acquire the company.
- They plan to retain the IBP name as a wholly owned subsidiary of Tyson, capitalizing on IBP’s recognition at the wholesale level and, increasingly, Thomas E. Wilson at retail.
- Tyson emphasizes building brand recognition and plans to do so for Thomas E. Wilson. They have the resources to “stay with the marketing plan through up and down cycles.”
- Some journalists in the audience asked questions or made comments suggesting that Tyson could use its position to strategically give poultry an advantage or exploit cyclical fluctuations in the cattle market to sell beef only when it was most profitable to the packer. John Tyson’s response: “I didn’t spend $4.5 billion to not sell beef.”
- Tyson expects some crossover in the use of facilities and marketing between poultry, beef and pork. They discussed using IBP’s refrigerated facilities and expertise in marketing fresh product, and their experience in developing pre-cooked products to expand their poultry line.
- The beef operation, Tyson says, will be entirely focused on the end product and meeting consumer demand. They plan to identify and develop the products consumers want, then provide incentives back through the production chain to acquire the kinds of cattle they need.