When you sit down for you your big dinner tomorrow, you'll no doubt give your full attention to family, friends and of course food. But Wednesday we thought you might be interested in a Corporate Dealmaker Thanksgiving Report on the deal activity that helped put the most seasonal of those foods on your table.
We'll start with Butterball LLC, the leader in turkey, which has had an interesting and apparently successful couple of years against a backdrop of rising grain prices and meat sector M&A.
Butterball was the choicest cut of the meat division at ConAgra Foods Inc., sold by ConAgra to Smithfield Foods Inc. for $575 million in July 2006. Smithfield then merged Butterball, valued at $325 million, into a
joint venture with Carolina Turkey, a lower-cost producer. Smithfield owns 49% of the JV, not an unusual sort of arrangement for the multibrand meat giant, which has revenues of nearly $12 billion. One of the chefs on this and Smithfield's many other deals was probably
Richard J.M Poulson, Smithfield's EVP for M&A.
So what's happened at Butterball since then? A lot, according to a
recent article at Watt Poultry.com. CEO Keith Shoemaker aims to use the well known brand, which is strongest in whole birds, to sell more turkey at the deli counter and in food service settings. A newly unified sales force should help. He's also cut costs, moving from company-owned to contract farms and closing a less-efficient slaughtering operation in Colorado. Indeed, he says he's eliminated $100 million in costs since the merger. Even so, there's a new headquarters in Garner, N.C.
And one other thing: Butterball's boss is a fierce foe of subsidies for corn-based ethanol, which of course is making turkey and other grain-fed animals cost more. Shoemaker warns that so far only 20% of the increased costs are reflected in his birds.
That's our turkey report. Don't miss our
reports on cranberry and
stuffing as well. -
Kenneth Klee- Dreaming of stuffing? Thoughts on Pepperidge Farms and Campbell- Business model lessons from the cranberry bog
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