The chicken sector, which is dominated by a handful of large meat companies, has come under increased scrutiny over the past year as customers and farmers have alleged antitrust violations relating to pricing, production and compensation.

U.S. poultry buyers claimed in a lawsuit in 2016 that Tyson, the nation’s biggest chicken processor, and its competitors had colluded since 2008 to reduce output and manipulate prices.

Tyson, Pilgrim’s Pride and Sanderson Farms have denied the accusations.

Investors in separate lawsuits have alleged the processors made misleading statements or failed to disclose information about price fixing.

Tyson CEO Tom Hayes declined to share details about its subpoena on a conference call with reporters after the company reported better-than-expected quarterly sales and profit. He said the company had not changed pricing practices.

Tyson received the subpoena from the SEC on Jan. 20 in connection with an investigation related to the company, according to regulatory documents.

The seller of Ball Park hot dogs said it had limited information and was cooperating with the probe, which is in an early stage.

Pilgrim’s Pride said it had not received a subpoena from the SEC. Sanderson Farms declined to comment.

Tyson’s stock ended down 3.5 per cent at $63.13 (all figures US$). Shares of Pilgrim’s Pride, mostly owned by meat packer JBS SA, lost four per cent to $18.64. Sanderson Farms shares slid 1.9 per cent to $89.50.

Commenting on the subpoena, JPMorgan analyst Ken Goldman said “obviously it is not a positive” for Tyson.

Joe Agnese, analyst for CFRA Research, said the news will restrict Tyson’s valuation until investors’ concerns are alleviated.

The subpoena arrived as Hayes is finding his footing as Tyson’s new CEO after taking over for Donnie Smith on Dec. 31.

Tyson has sought to increase profit by selling more value-added items such as pre-seasoned products and heat-and-serve meals, which command higher margins than basic meats.

Net income attributable to the company rose to $1.59 per share in the quarter ended Dec. 31 from $1.15 a year earlier. Sales were $9.18 billion, up from $9.15 billion.

Analysts on average expected earnings of $1.26 and revenue of $9.05 billion, according to Thomson Reuters I/B/E/S.

Tyson raised its full-year profit forecast to $4.90 to $5.05 per share from $4.70 to $4.85.

— Reporting for Reuters by Tom Polanasek in Chicago and Sruthi Ramakrishnan in Bangalore.

The post Tyson reveals subpoena linked to alleged price fixing appeared first on Farmtario.

The world’s biggest restaurant chain’s shares jumped 3.4 per cent in premarket trading on Monday.

McDonald’s introduced all-day breakfasts in October in the U.S., allowing customers to tuck into its popular Egg McMuffins and hash browns any time of the day.

The move was aimed at countering increasing competition from chains such as Wendy’s, Starbucks and Burger King, which have been doubling down on their breakfast offerings.

McDonald’s returned to sales growth in the U.S. in its third quarter after two years of no growth, following new CEO Steve Easterbrook’s turnaround plan that included cutting down on menu items, improving delivery times and refranchising more restaurants.

“In a sign that its turnaround efforts are paying dividends McDonald’s latest results show continued progress,” Neil Saunders, CEO of research firm Conlumino, wrote in a note.

Sales at McDonald’s U.S. restaurants open at least 13 months rose 5.7 per cent, handily beating the average estimate of 2.7 per cent.

“As we enter 2016, we expect continued positive top-line momentum across all segments,” said Easterbrook, who took the helm last year, in a statement Monday.

The company does not break out China sales but said sales in its “high growth” markets, which include Russia and China, rose three per cent.

McDonald’s is recovering in China following a food safety scandal that broke in July 2014 and hammered sales in the country for at least a year.

McDonald’s also said it would refranchise about 4,000 restaurants through 2018 to become 95 per cent franchised, up from its previous target of selling 3,500.

Global same-restaurant sales rose five per cent, above the 3.2 per cent expected by analysts polled by research firm Consensus Metrix.

The company’s net income rose 9.9 per cent to $1.21 billion, or $1.31 per share, in the fourth quarter ended Dec. 31.

Analysts on average had expected earnings of $1.23 per share, according to Thomson Reuters I/B/E/S.

Revenue fell 3.5 per cent to $6.34 billion, mainly due to a strong dollar, but beat the average analyst estimate of $6.22 billion.

McDonalds’ shares have risen 23 per cent in the past six months, outperforming those of rivals Starbucks and Dunkin’ Brands Group.

— Reporting for Reuters by Sruthi Ramakrishnan in Bangalore.

The post McDonald’s sales beat as all-day breakfast a hit appeared first on Farmtario.

The maker of Chef Boyardee pasta and Healthy Choice dinners is under pressure to cut costs and accelerate growth as consumers shift from packaged food to options they consider fresher, healthier alternatives. In July, the company added two directors to its board as part of an agreement with Jana Partners after the activist hedge fund took a stake in the company.

The job cuts mark the latest changes implemented by ConAgra CEO Sean Connolly, who joined in April. The company also announced in June that it would divest its struggling private-label business.

“While we believe that we can create a lot of value with ConAgra Foods, that’s only going to happen if we make bold change, and we’re going to continue to push for change,” Connolly said in an interview. He added that the move to Chicago allowed the company to consolidate its consumer foods business in one location.

The job cuts, which exclude the private label business, represent about 30 per cent of ConAgra’s office-based workforce. Overall, ConAgra had about 32,900 employees as of May.

About 1,200 employees will be left in Omaha following the cuts, down from roughly 2,400, excluding ConAgra’s private brands workers, Connolly said.

Nebraska Governor Pete Ricketts said in a statement that he regretted ConAgra’s decision, and that the government would be ready to assist Nebraskans seeking reemployment due to the restructuring.

Beginning summer of 2016, about 700 employees, including the company’s senior leadership, will be located at the new Chicago headquarters.

The workforce reductions, in addition to the company’s adoption of zero-based budgeting, which requires managers to justify each year’s costs from scratch, will account for $200 million in savings (all figures US$). The other $100 million will come from more efficient spending on promoting products within stores, ConAgra said.

“While we view these efforts as prudent, we don’t believe ConAgra is poised to post operating margins on par with the midteens generated by industry peers, given its lagging brand set,” said Morningstar analyst Erin Lash, noting that increased investments in marketing and innovation would partly offset savings.

ConAgra estimated restructuring-related cash charges of about $345 million over the next two to three years.

Shares of ConAgra were little changed at $40.54 on Wednesday.

— Reporting for Reuters by Anjali Athavaley in New York and Sruthi Ramakrishnan in Bangalore.

The post ConAgra to cut 1,500 jobs, shift base to Chicago from Omaha appeared first on Farmtario.

ConAgra CEO Sean Connolly, who joined in April, said on the company’s earnings call on Tuesday it was clear trying to turn around the private label business was draining resources and that the segment would likely attract significant interest from potential buyers.

ConAgra bought Ralcorp in 2013 to become the biggest maker of U.S. private label foods. The business has been plagued with problems ranging from customer service issues to pricing concessions, with sales falling nearly six per cent in two years.

“We know that the inconsistency of our past performance is totally unacceptable,” Connolly said.

ConAgra, like others in the industry, is under pressure to cut costs and accelerate growth as consumers shift away from packaged food to options they consider to be fresher, healthier alternatives.

Earlier this month, activist hedge fund Jana Partners took a 7.2 per cent stake in ConAgra, becoming its second-largest shareholder, and said it was prepared to nominate directors to the company’s board to help address “persistent underperformance” since the $5 billion Ralcorp acquisition (all figures US$).

“Today ConAgra acknowledged the need to pursue a new strategic direction,” Barry Rosenstein, Jana Partners managing partner, said in an emailed statement on Tuesday. “We look forward to our ongoing discussions with the company and its advisers.”

KeyBanc Capital Markets analyst Akshay Jagdale wrote in a note that TreeHouse Foods and Post Holdings could be buyers for the private label business. Both companies did not respond immediately to requests for comment.

On the call, Connolly said the company would implement zero based budgeting, where expenses must be justified for each new period. He also left the door open to future divestitures.

“There may be brands that over time can find better homes elsewhere,” he said. “We will actively consider monetizing those assets to fuel other investments when appropriate.”

ConAgra’s net sales for the fiscal fourth quarter ended May 31 rose 3.7 per cent to $4.1 billion, but came in below analysts’ average estimate.

Net profit attributable to ConAgra was $209.2 million from a loss of $324.2 million a year earlier. ConAgra’s profit of 59 cents per share, excluding items, was in line with analysts’ estimates.

— Anjali Athavaley and Sruthi Ramakrishnan cover the U.S. food and beverage sectors from New York and the U.S. consumer and retail sectors from Bangalore respectively. Additional reporting for Reuters by Siddharth Cavale in Bangalore.

The post ConAgra Foods to exit struggling private label business appeared first on Farmtario.

Shares of Kraft — which operates 35 plants in Canada, the U.S. and Puerto Rico — were up more than 38 per cent near $85 in morning trading (all figures US$).

The deal would provide Heinz with access to Kraft brands, which it says are in 98 per cent of North American households and include well-known names like Oscar Mayer and Jell-O.

The international presence of Heinz, whose Canadian holdings include two processing plants in Ontario, provides an opportunity to sell Kraft’s brands overseas.

Kraft stockholders would get one share in the combined company, to be called the Kraft Heinz Co., and a special cash dividend of $16.50 for every share held.

Heinz shareholders will own 51 per cent of the combined company and Kraft shareholders the rest.

Packaged-food makers such as Kraft are battling sluggish demand as consumers shift to products perceived to be healthier.

Kraft has overhauled its senior management over the past few months and has said it will develop products to meet changing consumer preferences.

However, “the board saw the 3G opportunity as more compelling,” Kraft CEO John Cahill, who will be vice-chairman of the combined company, said on a conference call.

The combined publicly traded company is expected to save about $1.5 billion in annual costs by the end of 2017. It will have eight brands worth over $1 billion each, the companies said.

Kraft Heinz will be led by Heinz CEO Bernardo Hees and have revenue of about $28 billion, about half that of market leader PepsiCo in 2014.

Berkshire Hathaway will own more than 320 million shares in the combined company, which will have about 1.22 billion shares outstanding, Buffett told CNBC.

“We will be in the stock forever,” he said.

Brazilian private equity firm 3G Capital and Berkshire Hathaway acquired Heinz for $23.2 billion in 2013.

The Kraft deal is unlikely to face antitrust hurdles as there is little overlap in products, analysts said.

Kraft’s products include cheese, processed meats, packaged meals and Maxwell House coffee, while Heinz makes ketchup, sauces and frozen foods.

Kraft is 3G Capital’s fifth major deal in the food and beverage industry since 2008, when it engineered a takeover of Anheuser-Busch by brewer InBev.

3G Capital also controls Restaurant Brands International, formed when its Burger King business bought Canadian coffee and donut chain Tim Hortons.

— Sruthi Ramakrishnan and Anjali Athavaley report for Reuters from Bangalore and New York City respectively. Writing for Reuters by Lisa Von Ahn.

The post Kraft to combine with Heinz in deal led by 3G, Buffett appeared first on Farmtario.

The acquisition is a victory for Brazilian-Lebanese financier Joseph Safra and orange juice baron Jose Luis Cutrale, who joined forces to add Chiquita to their tropical fruit business. Both tycoons fought for almost three months to win control of Chiquita, which rebuffed their three previous takeover attempts and sought to merge with rival Fyffes Plc .

Under terms of the accord disclosed in a statement earlier in the day, Charlotte, N.C.-based Chiquita will become a wholly owned unit of Cutrale-Safra and remain incorporated in New Jersey once the deal is finalized. Chiquita, Fyffes, Fresh Del Monte Produce and Dole Food control the $7 billion global banana market (all figures US$).

“To ensure Chiquita has the premier and most sustainable platform in its sector, Chiquita will be able to access Cutrale-Safra’s substantial experience in all aspects of the fruit and juice value chain and extensive financial expertise,” the statement added.

Shares of Chiquita, which gained over 40 per cent since Aug. 11, when Cutrale-Safra made their takeover intentions public, added 1.4 per cent to $14.36 in New York. The shares shed two-thirds of their value over the past decade in the face of geopolitical instability in Latin America, price volatility and uneven demand for fresh produce around the world.

Cutrale-Safra face the challenge of maintaining Chiquita’s leading position in the banana market, bolstering slim margins and mitigating volatile operating conditions, analysts said. The entity resulting from the failed Chiquita-Fyffes merger would have been the world’s largest banana producer.

Shareholders of Chiquita will be paid $14.50 for each of their shares in cash, valuing the company at about $682 million. Cutrale-Safra will assume Chiquita’s debt, with Safra-controlled bank J. Safra Sarasin AG extending a buyback of the banana producer’s senior bonds due in 2021. The value of the deal, including debt, amounts to $1.3 billion, the statement said.

The deal comes as Safra, the world’s richest banker, continues to diversify his $16 billion fortune out of banking, finance and real estate. Faced with declining orange juice consumption globally, Cutrale and his family business are expanding into new regions and products after venturing into grain trading in recent years.

The transaction is subject to regulatory approvals and is expected to close by the end of the year or early 2015, the statement added.

“We look forward to working with Cutrale-Safra to ensure a smooth transition and complete the transaction as expeditiously as possible,” Chiquita CEO Ed Lonergan was quoted by the statement as saying.

— Guillermo Parra-Bernal and Sruthi Ramakrishnan report for Reuters from Sao Paulo and Bangalore respectively.

The post Cutrale-Safra wins takeover battle for fruit producer Chiquita appeared first on Farmtario.