Earlier this week, a Delaware court demanded the resuscitation of the meat industry mega-merger between the US’ largest protein provider Tyson Foods and beef processing giant IBP. Good news for the supermarket shelves, say analysts, but who exactly is driving the chicken colossus?
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The US$23bn merger was partly the brainchild of Tyson’s CEO and chairman John H. Tyson, who famously vowed to produce “the Procter & Gamble of the meat case.” However, when the deal was allegedly aborted in March under the orders of his father, and the firm’s senior chairman, Donald Tyson, many began to question the credibility of John Tyson’s leadership.
“It is fair to question the management situation there,” Jaine Mehring, an analyst at Salomon Smith Barney told the New York Times: “You start to ask the question: Who is really driving the bus here?”
There is evidence that John attempted to talk his father round to the idea. According to transcripts from the Delaware trial, John Tyson asked Richard L Bond, IBP’s president and COO: “My dad’s a little nervous about how we’re going to pay for all this debt when we get the two companies put together. Would you mind spending some time with my dad and talk to him about, about the business, and try to make him, you know, more comfortable?” The fact that many believe that Donald never fully welcomed the costly deal is perhaps indicative of some poor persuasive skills.
Within Tyson, the official line is that the firm’s leaders support each other, and the deal, fully. Spokesman Ed Nicholson commented: “Anyone who is trying to draw the conclusion that Don is overruling John is not drawing the right conclusion.”
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By GlobalDataThe challenges posed by the joining of Tyson and IBP are great enough. Tyson must honour its January agreement and assume a US$4.5bn debt load, and together the companies face a weakening market for beef and chicken products. As news seeped out of John’s subordinate role to his father’s decisions over the last few months however, analysts are waiting with baited breath for any evidence of his incapability.
