Foster Farms enters a new era of ownership with a familiar face in leadership and an array of opportunities and challenges on the horizon.
The Livingston, Calif.-based poultry company announced yesterday that it had been sold to Greenwich, Conn.-based Atlas Holdings for an undisclosed amount. Rumors had been circulating last fall that Foster Farms' family ownership was exploring a sale, but nothing further was heard until the companies announced that the Atlas deal had closed.
New Foster Farms CEO Donnie Smith is coming out of a retirement period that began in 2017, after 36 years with Tyson Foods, the last seven of which were as that processing giant's CEO. He left Tyson with a $24 million payout and in "retirement," Smith remained busy with philanthropy: Smith's foundation helped set up farmers in Rwanda with chicken coops, teaching them to raise broilers sustainably, and also built a camp stateside for disabled children. He endowed a chair at the University of Tennessee dedicated to international sustainable agriculture.
As Tyson CEO, he navigated the company through difficult earnings periods in 2011 and 2012, and led the company through its $8.55 billion purchase of Hillshire Brands in 2014. That deal bolstered Tyson's manufacture of such value-added products as sausage, hot dogs and frozen protein breakfasts in addition to lessening its exposure to chicken commodity cycles. Tyson's bottom line benefits from those moves to this day.
Foster Farms will need Smith's savvy and experience. The nation's 10th-largest poultry processor has had to overcome several food safety setbacks earlier in the decade to emerge, by 2015, as an industry leader in poultry food safety. In 2019, it also acquired some of the assets of bankrupt Zacky Farms for an undisclosed amount.
However, Foster Farms did not fare well during the pandemic, as COVID-19 spread through its plants like wildfire in 2020, along with most other meat and poultry processing facilities. The company's hometown plants and elsewhere were forced to close more than once in the wake of the virus, and at various times the company was forced by regulators to take steps to protect employees. For example, a year ago it was fined $181,500 by the state of California for not protecting employees from COVID-19.
At a time of high meat and poultry prices, privately held Foster Farms likely is performing well financially, along with others in the industry. But it also faces new competition from alternative meat producers. Unlike companies such as Tyson or Maple Leaf Foods in Canada, Foster Farms has neither invested in alternative meat technology nor sought to add such items to its product line, although a meat-and-vegetables hybrid product is sold under its Farm & Garden brand.
No doubt Atlas Holdings is betting that new CEO Smith's track record of strategic wins and steady management will unlock unrealized value in Foster Farms' assets. The company will retain its name and brand that's been in use for 83 years.
As for his part, Smith said in a speech in 2019, "I miss the hunt, I miss the fight and the external challenges of running a large company. I loved the thrill of creating a new product or signing a new customer and most of all … so many of the relationships I made" working in the poultry industry.
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