Tyson reveals subpoena likely linked to alleged price fixing

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By Tom Polansek and Sruthi Ramakrishnan

<span class="articleLocation”>Tyson Foods Inc disclosed on Monday it
had received a subpoena from U.S. authorities that it said
likely stemmed from allegations the company conspired for years
with rivals to fix chicken prices.

Last year, U.S. poultry buyers sued Tyson, the nation’s
biggest chicken processor, and other companies, claiming they
had colluded since 2008 to reduce production in violation of
antitrust laws. Tyson has denied the accusations.

The seller of Jimmy Dean sausage and Ball Park hot dogs
received a subpoena from the U.S. Securities and Exchange
Commission on Jan. 20 in connection with an investigation
related to the company, according to documents filed with the
SEC.

Tyson said it had limited information and was cooperating
with the investigation, which it believes to be in an early
stage.

Chief Executive Tom Hayes declined to share details about
the subpoena with reporters on a conference call after the
company reported better-than-expected quarterly revenue and
profit.

Pilgrim’s Pride Corp, which was also sued for
allegedly conspiring to fix chicken prices, said it had not
received a subpoena from the SEC. The company has said it will
fight the accusations.

Tyson’s stock was last down 2 percent at $64.06 after
earlier falling more than 3 percent. Shares of Pilgrim’s Pride,
which is mostly owned by meat packer JBS SA, were
down 1.7 percent at $19.08.

Shares of Sanderson Farms Inc, which was also named
in the price-fixing lawsuit, fell 1.7 percent to $89.65. Sanderson did not immediately respond to requests for comment
and has previously denied the allegations.

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

The subpoena and strong financial results come as Hayes is
getting his footing as Tyson’s new chief after taking over for
former CEO Donnie Smith on Dec. 31.

Last month, chicken farmers sued Tyson and other poultry
companies for allegedly conspiring to depress their pay. Tyson
has denied those allegations.

“We wonder what exactly is being investigated and what risk
this creates for Tyson,” RBC Capital Markets said.

Tyson has sought to increase profits 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 $593 million,
or $1.59 per share, in the first quarter ended Dec. 31, from
$461 million, or $1.15 per share, a year earlier. Sales were
$9.18 billion, up from $9.15 billion a year ago.

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

Tyson raised its forecast for full-year profit to $4.90
to$5.05 per share, up from its earlier forecast of $4.70 to
$4.85.



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