Beef Industry More Reserved About Merger

Industry officials representing both the pasture and the hen house have been watching carefully the merger proceedings of Tyson Foods Inc. and IBP Inc.

Tyson, the chicken giant, is only about a month away from finalizing its $4.6 billion acquisition of IBP, the meatpacking giant.

The deal includes $1.7 billion in IBP debt. The attitude of the poultry industry is not as reserved as their counterparts from the beef industry.

In fact, the National Cattlemen’s Beef Association steered questions regarding the merger from the Northwest Arkansas Business Journal to a statement released in June.

In that statement, NCBA President Lynn Cornwell said, “… Activities surrounding IBP, as the largest beef processor worldwide, are important to the beef industry’s continued success in increasing beef demand. While Tyson has been very successful processing and marketing poultry, beef is unique and we are interested in the company’s vision for the beef industry.

“We look forward to continuing our communications with Tyson officials to learn more about their plans for IBP.”

Dick Lobb, director of communications for the National Chicken Council, feels things will work out smoothly for Tyson.

“Tyson was a very fine company before IBP, and I’m sure it will be fine afterwards,” Lobb said. “There are other companies that have their foot in both [food group] camps. But this combination will be interesting.

“There have been ongoing mergers in the poultry industry. I think everyone in the chicken industry expects consolidation to continue. Where it will end, no one knows.”

Yvonne Vizzier Thaxton, the new executive editor of Poultry magazine and professor of poultry science at Mississippi State University, also said there should not be cause for alarm within the Tyson community. She said the acquisition plays into Tyson’s strong suit — marketing.

“This is not new for Tyson,” Thaxton said. “They’ve done seafood and pork. Now, they’re moving into beef, so it’s not like some out-of-the-blue thing they’ve done. Yes, this is something with IBP that’s not been done before, so the jury’s still out. We’ll wait and see how it plays out.

“I’m not sure the beef acquisition will have a tremendous impact on the poultry industry. But the poultry industry is very cyclical. [Tyson is] doing what they can to smooth the cycle out. This gives Tyson the opportunity for some really unique marketing. Tyson has now separated itself from the chicken community. Tyson is over here, and the rest is over there.”