Pork Commentary

Jim Long President – CEO Genesus Inc.


June 16, 2014


Tyson to buy Hillshire Farms!!

It appears Tyson Foods has won a bidding war with Pilgrims Pride to purchase Hillshire Farms. If everything transpires as proposed the $7.7 billion purchase would exceed Shuanghui’s purchase of Smithfield Foods earlier this year. Hillshire Farms is the maker of Jimmy Dean Sausage, Ball Park Hot Dogs. Tyson’s move will position it strongly in the shelf space prepared breakfast products. Tyson’s acquisition is aggressive and clearly sends the signal Tyson is looking to move from a primary fresh poultry and red meat to added value prepared food. For our industry it is a signal that there is luster in the meat protein sector when companies like Tyson and Shuanghui are looking to invest deeply with billions of dollars further in our industry. To us this is positive when what we believe is smart money seeing the long term value in the meat related sector.

World Pork Expo Part II

Genetic Company Merry Go Round

  •  June 4 Choice Genetics USA LLC announced they jointly filed a plan of reorganization (Plan) with the Official Committee of Unsecured creditors in the case.
  • Choice Genetics part of the French owned Groupe Grimaud had filed bankruptcy with debts of $21.8 million, with $14 million due to unsecured creditors and $486,000 in assets.
  • Scidera the major unsecured creditor with over $10 million owed has reached terms of a settlement (this after Scidera had actively sought new stakeholders for Choice Genetics LLC.). The reorganization plan is subjected to approval in the reorganization case.
  • Choice will then be challenged if proposal is accepted to rebuild their brand, and customer confidence that obviously gets eroded by bankruptcy. Finding new customers having already lost customers during the bankruptcy it will be even harder to find new ones. Tough slugging ahead.
  • Another announcement about Genetics at the World Pork Expo was the announcement of Topigs and Norsvin two co–ops forming a joint company for international marketing outside Norway (Norsvin) and Topigs (Holland). Interesting development but we have to say we don’t get it. Usually when companies get together it’s for consolidation instead the entity Topigs – Norsvin goes from two companies to three. A competitor’s salesman came up with short name moniker for new joint venture company – Nopigs!
  • Appears to us Topigs is in charge of deal. Office in Holland. CEO from Holland. Western Hemisphere Manager from Holland. Each company keeping their own breeding lines. We expect after a while the Norwegians will get tired of the Dutch trying to run everything. While PIC buying Genetiporc had real common sense this one we can’t figure out. Time will tell.
  •   Also at World Pork Expo like a phoenix rising from the ashes was a Danbred Exhibit. After being dropped by their franchise in North America, Danbred is trying to re–establish themselves in North America.
  • The original Danbred group in Nebraska that morphed into DNA were smart, they made more for their own brand before Danbred created new franchises to compete with them. The Nebraska group stopped building Danbred brand. Now the Danes are looking through the schoolyard fence hoping to get to play. As we said smart move Nebraska group. It helped not only you but all other established North American companies.
Genetic Merry Go Round continues…

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This post was written by Genesus