A Wynco Combination

Tollett leads poultry suppliers through mergers

A year after merging three agricultural production and distribution companies, Gary Tollett said business looks promising.

As president of the surviving company, Wynco Distributors LLC, Tollett said he initiated talks that led to a 50/50 partnership with Alpharma Inc. “to create a stronger, more efficient business.”

Alpharma is a multinational pharmaceutical company that develops, manufactures and markets generic and proprietary human pharmaceutical and animal health products. Alpharma had sales of $604.6 million in fiscal 1998.

Wynco is the result of the January 1999 merger of three Northwest Arkansas companies: G&M Animal Health Distributors, T&H Distributors and Wade Jones Co., the latter of which was owned by Alpharma.

Operating in Northwest Arkansas from a 120,000-SF warehouse in Lowell, Wynco expects to net $4 million in profits this year on sales of $85 million, Tollett said.

Employing 115 people throughout the United States in 12 warehouse locations, Wynco owns exclusive distribution rights for the animal health division of Alpharma, selling and delivering all over the country except in California and a few states in the upper Midwest.

“We go everywhere that has a chicken on the ground, except California,” Tollett said.

A year after the merger, Wynco appears to be running smoothly, but the joining of the different entities caused some troubles.

During the first six weeks after the merger, 21 of the 37 employees Wynco expected to inherit from Wade Jones Co. quit their jobs. Aside from a sudden loss of employees, the situation was rough because the new company planned to use the computer systems from Wade Jones, and many of the people familiar with the system had walked out.

“We probably lost $6 [million] to $8 million, looking back at it,” Tollett said. “Everybody around here last February and March was a key player.”

Now, in addition to sales of $85 million, Wynco expects to transport another $80 million in commissioned products.

Tollett said 30 percent of Wynco’s distribution business comes from Alpharma, but the company also represents many of the other major animal health distributors for poultry and swine. In the Lowell location, Alpharma produces some feed products and supplemental pharmaceuticals, which are distributed and sold by Wynco.

Tyson Foods Inc. of Springdale supplies about five percent of Wynco’s business.

“Tyson is one-third of the poultry industry, so you need them,” Tollett said. “You have a problem if you don’t have them.”

ConAgra, Pilgrim’s Pride and Gold Kist also contribute to Wynco’s business with commission work and sales. Commission work only includes Wynco’s distribution of the animal products. Twenty-five trucks are used to deliver products around the nation for Wynco.

When the three companies joined, Alpharma held more assets than the others, leaving Wynco with some debt. Of the profits from Wynco, Alpharma receives 60 percent, which will probably continue for another four years until the debt is paid to Alpharma. Then Wynco and Alpharma will be 50/50 partners in the Northwest Arkansas operation.

Until then, Tollett said Wynco will continue to address the demands of the consumer, with the greatest of those being to deliver a safe product. To that end, Wynco implemented “best management practices,” an inspection program that allows company representatives to work with hatchery and processing plant employees to insure that products are clean and safe.

“It’s like my dad told me,” Tollett said, “‘Hard work takes care of lots of things.'”

Tollett bought G&M in 1991 when the company had about $9 million in sales and operated out of a single Springdale location. When G&M merged in 1999, the company brought in about $22 million in annual sales, Tollett said.