Tyson Scrambles to Regain Chicken Profit as New Competitor Looms

 Tyson Foods Inc., the top poultry producer in the U.S., is racing to get its chicken unit back on track as a new, formidable competitor emerges.

The third and sixth biggest U.S. chicken companies, Sanderson Farms Inc. and Wayne Farms Inc., are combining in a $4.53 billion deal, according to a statement Monday from buyers Cargill Inc. and Continental Grain Co. The deal comes as Tyson’s chicken unit posted a loss in its third quarter amid a series of headaches including high feed prices, production challenges and millions in legal costs stemming from price-fixing lawsuits.

...“Chicken is our top priority for me and for our company,” Tyson Chief Executive Officer Donnie King told analysts in a call Monday to discuss financial results. “We continue to be laser-focused and making progress in restoring the competitiveness of our chicken segment.

...”The deal for Sanderson Farms represents something of a homecoming to U.S. chicken for Cargill, which is one of the world’s biggest crop traders and beef producers, but had sold its U.S. broiler operations in 1995, to Tyson. Sanderson’s merger with Wayne Farms is also striking because of the recent attention that antitrust in the meat sector is attracting. The industry is growing ever more concentrated, and meat companies have argued that only scale can provide the world with affordable meat amid increasing demand. If the deal is approved, the top four U.S. chicken producers would account for over 56% of the market, according to current industry estimates...MORE